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On The Adelaide Horizon - April 2008

May 15, 2008
Year 2007 indeed proven to be a surprise packet for the Adelaide real estate market, with the Adelaide Median home price moving forward approximately 20%. This was a unique year not because Adelaide residential property was in high demand but because of where the demand was coming from.

According to the anecdotal observation of Mark Sanderson of Smallacombe Sanderson, 2007 represented a year where higher proportions of interstate buyers were entering the South Australian market. This observation was made even more interesting as for the first time, buyers were emerging from Western Australia which historically has not previous been a market for South Australian Real Estate.

In the face of rising interest rates, property prices have continued to rise in South Australia. Despite this, the 2007 December quarter median home prices across the Australian mainland capital cities indicate that the median home price for Adelaide is well below any other mainland city and is in fact the only mainland city with median home price below $400,000, as is evident from table 1.

City - Median

Adelaide - $350,000
Brisbane - $410,000
Darwin - $412,000
Canberra - $457,000
Perth - $465,000
Melbourne - $485,000
Sydney - $551,000

Australian Weighted Average $471,300
Source: Real Estate Institute of Australia

Arguably much of the interest surrounding South Australia has been directed at its mining sector. Following from the Perth property markets recent boom, which was primarily driven by its resources, much attention is now being directed at the South Australian property market.

It is expected that the effects of mining and the economic prosperity it brings to a region will indeed be felt in South Australia for many decades to come. The building momentum of public sentiment surrounding global warming is bringing into question the wisdom of the long term continued use of fossil fuels. Given the abundance of fossil fuels and our current dependence on them, the shift away from these fuels will not be slow or easy. The threat of global warming has however focused many nations attention towards alternative power sources and uranium is very much on the agenda.

Given the largest know deposit of Uranium is now know to exist in South Australia as well as plans to significantly open these mines, many have predicted prosperous times ahead for the state and the city of Adelaide. What is less know are the various other mines operating throughout the state as well as the extent of additional mining exploration occurring. Much of South Australia's resources have yet to be explored and a recent push towards remedying this situation has been underway. See figure 1.

Figure 1(http://www.adelaidepropertyfinders.com.au/docs/page/133/136/figure1.gif). Source: Minerals and Energy Resources South Australia, PIRSA

The exponential increase in mineral exploration expenditure over the last 4 years has resulted in a dramatic increase in mineral exploration licence coverage throughout the state as is evident from figure 2.

Figure 2(http://www.adelaidepropertyfinders.com.au/docs/page/133/136/figure2.gif). Source: Minerals and Energy Resources South Australia, PIRSA

The significant increase in mineral exploration expenditure in addition to the states know resources makes for part of the foundation currently being laid which is likely to cement South Australia's prosperity for years to come. This together with the lowest median home price of any mainland Australian city places the South Australian real estate market in an enviable position and gives it a fresh set of legs with plenty of room to catch up.
About the Author
Angelo Mena is the director of the Adelaide buyers' agent, "Adelaide Property Finders" - http://www.adelaidepropertyfinders.com.au. He is also a property investor, a property investment lecturer as well as the publisher of 'The Adelaide Investorgator'.
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