{"id":7764,"date":"2016-04-21T10:00:45","date_gmt":"2016-04-21T00:00:45","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7764"},"modified":"2016-04-21T10:00:45","modified_gmt":"2016-04-21T00:00:45","slug":"dont-discount-sa-sydney-takes-a-breather-face-the-new-property-market-reality","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/dont-discount-sa-sydney-takes-a-breather-face-the-new-property-market-reality\/","title":{"rendered":"Don\u2019t discount SA + Sydney takes a breather + Face the new property market \u2018reality\u2019"},"content":{"rendered":"

George Raptis<\/strong> tells us that while Sydney is taking a breather, it is still performing well.\u00a0 Good properties are short and demand is strong.\u00a0 He says developers are going crazy.
\nKorgen Hucent<\/strong> gives us a sobering report on the Northern Territory and that the oversupply is bringing a whole different type of investor into that market.\u00a0\u00a0 He tells us about the new challenge property owners are facing.
\nFor the first time in this whip around the country, we acknowledge the importance of the North Queensland property market and Chris Gay<\/strong> from Cairns gives us his view on why investors remain positive about the north.
\nDr Andrew Wilson<\/strong> from Domain takes an overall view of the national market and says we have a new reality in the Australian housing market as he predicts the boom times are behind us and the market is likely to flatten.
\nDespite so much bad news coming out in the South Australian market, what with the news from Holden and more recently the shut down in Wyalla, Peter Koulitzos<\/strong> says investors should not discount the infrastructure development happening there.
\nKate Forbes<\/strong> helps us understand why the ACT market has underperformed in recent years but she points out there are some signs of improvement but that with a looming Federal election, consumer sentiment will again play a roll in what happens there.
\n 
\nTranscripts:<\/strong>
\nGeorge Raptis –\u00a0<\/strong>
\nKevin:<\/b>\u00a0 As you heard at the start of the show, this week and next, we\u2019re going to be looking at Australia, at the different property markets. Where better to start than in the Sydney market, one of the hottest markets we\u2019ve seen in a long time? Our expert on the ground there is none other than George Raptis from Metropole Properties in New South Wales.
\nGeorge, it\u2019s been an incredible time \u2013 hasn\u2019t it \u2013 for that market?
\nGeorge:<\/b>\u00a0 It sure has, Kevin.
\nKevin:<\/b>\u00a0 Let\u2019s have a bit of an overview. We\u2019ll have a look at the Sydney market first and then take me into the state overall. Tell me what you\u2019re seeing there now.
\nGeorge:<\/b>\u00a0 It was a head-spinning 2015, wasn\u2019t it? Property markets had started 2016 with a bunch of mixed predictions: some people calling for property bubbles, others forecasting lower but some continuing capital growth.
\nThe scorecard is in for the first quarter, and yes, our property market have slipped down a gear a little. The Sydney market is taking a well-earned breather, with house prices dropping in some locations, but overall, they\u2019re up nearly 50% from the previous market trough in 2012.
\nKevin:<\/b>\u00a0 What\u2019s impacting the market now, both positive and negative, George?
\nGeorge:<\/b>\u00a0 I\u2019d say the fundamentals for our harbor city <\/b>property market are sound because jobs are being created here and the population continues to grow strongly, actually. There was a lot of the media reporting that Sydney markets dropped. That\u2019s true; the market is still fragmented with a shortage of good properties, especially in areas like the inner western and eastern suburbs, at a time when there is still strong demand from both homebuyers and investors.
\nKevin:<\/b>\u00a0 Are there any areas that you\u2019d avoid, both in Sydney and in the state?
\nGeorge:<\/b>\u00a0 I haven\u2019t been in [1:44 inaudible]<\/b> a long time, as you know. There are certain areas that I am concerned about, especially areas in previous industrial areas where they\u2019re now over-developing, a lot of new things mushrooming out of the ground.
\nThe last time I saw it was the last boom here in Sydney in the 1999\u20132003 fall when a lot of people bought speculatively, a lot of off-the-plan type properties and when they were due to complete, unfortunately, evaluations came in low and they couldn\u2019t get them rented because so many of them looked the same. I have a little bit of concern about that particular segment in the market, for sure.
\nKevin:<\/b>\u00a0 How would you describe investor sentiment right now?
\nGeorge:<\/b>\u00a0 The current low in the property market is creating, in my opinion, a great opportunity for both homebuyers and investors, especially those with a long-term perspective. But you have to be careful; as we know, property selection is critical.
\nAuction clearance rates are always a pretty good barometer, in my opinion, as far as how people are feeling as far as sentiment is concerned. Since the auction markets kicked in at the beginning of the year, it\u2019s been quite positive. Auction clearance rates have been hovering around that mid-70% band.
\nOur economy here is strong. The government is spending some serious money on infrastructure. We have strong population growth and low vacancy rates currently. All of that means that some segments of our market here are likely, in my opinion, to revive in the second half of 2016.
\nKevin:<\/b>\u00a0 Are there any developments or infrastructure projects on the go \u2013 in the planning or underway \u2013 that you think are going to impact the market in New South Wales?
\nGeorge:<\/b>\u00a0 I\u2019d have to say you need to look at places like the inner west where the state government spent a fortune on that new light rail and what that has actually done for that location there and how easier it\u2019s made it for people to commute in and out of town. I\u2019d be suggesting looking at where the new light rail is going to be servicing the eastern suburbs of Sydney. I think that\u2019s going to impact that particular market big time.
\nKevin:<\/b>\u00a0 Let\u2019s have a look at what buying opportunities there are right now. What\u2019s the best buying in the capital now \u2013 where and what do we get for our money?
\nGeorge:<\/b>\u00a0 I\u2019d still suggest looking at properties in the inner and middle ring, established properties where there is that scarcity and demand. Home buyers are selecting a lot more carefully now, their decisions being driven more by lifestyle. In other words, a lot of them are trading backyards for balconies in well-located apartments in a lot of Sydney\u2019s gentrifying suburbs. They\u2019re the sort of areas that I\u2019d be focusing on, for sure.
\nKevin:<\/b>\u00a0 What are we going to get for our money in those areas? Are we looking at units or houses?
\nGeorge:<\/b>\u00a0 You\u2019d predominantly be looking at units. Entry level for something in the inner west, you\u2019re talking somewhere in the vicinity of $500,000 and up from there.
\nKevin:<\/b>\u00a0 At $500,000, that would be single bedroom, or would it be a two-bedder?
\nGeorge:<\/b>\u00a0 In the inner west, that would single bedroom. In some cases, there is still a possibility of getting a two-bedroom apartment.
\nKevin:<\/b>\u00a0 What sort of rental return would you get on one of those?
\nGeorge:<\/b>\u00a0 I was actually speaking to our property management head the other day, and the rental market has picked up a lot in the sense that vacancies have tightened up a lot, we\u2019re seeing big numbers of people attending open for inspections, rents are starting to creep. I think the next headline that the media might <\/b>jump on the bandwagon \u2013 and this might be a bit of crystal ball gazing \u2013 is I think we might hear those two words \u201crental crisis\u201d again.
\nKevin:<\/b>\u00a0 Good talking to you. George Raptis from Metropole Properties in Sydney.
\nGeorge, always good catching up, mate, and thanks for your very valuable time.
\nGeorge:<\/b>\u00a0 Likewise, Kevin. Thanks very much.
\n 
\nKorgan Hucent –\u00a0<\/strong>
\nKevin:<\/b>\u00a0 Let\u2019s go from one end of Australia to another. Two very different markets \u2013 Sydney and Darwin \u2013 and this time, we\u2019re going to take you to the Darwin Northern Territory market. I\u2019m talking to Korgan Hucent from Ray White at Bayside, working out of the Darwin market.
\nKorgan, thank you very much for your time.
\nKorgan<\/b>:\u00a0 Thanks, Kevin. It\u2019s good to be on the show.
\nKevin<\/b>:\u00a0 I\u2019d have to say as an outsider, Darwin\u2019s had a bit of a patchy year. Would you agree with that?
\nKorgan<\/b>:\u00a0 Yes. Look, that\u2019s probably being a little bit conservative. Property values and the market performance probably peaked in mid-2014, and we\u2019ve certainly seen a softening of the market, certainly in the last 12 months. That\u2019s for sure.
\nKevin<\/b>:\u00a0 What impact has that had? Has that brought more opportunistic buyers into the market, Korgan?
\nKorgan<\/b>:\u00a0 It has. We\u2019ve seen a drop in volume both in the housing and the unit market of a significant figure. Housing, overall, Darwin is down by about 30%, but the unit market is down and probably more affected by almost 50%. Just a result of oversupply and of developments that were up and running in 2013 and 2014, and now, obviously, just loads of choice. The market is certainly not where it was this time in 2014.
\nKevin<\/b>:\u00a0 One of the questions I wanted to ask you was how would you assess investor sentiment, but I might swing that around and ask you about developer sentiment. What are they saying to you? Are they confident about coming out of the ground?
\nKorgan<\/b>:\u00a0 In my conversations on the ground, there\u2019s certainly a loss of confidence both from investors for properties that we manage and just general sentiment, but also developers recognizing that obviously the market is down, and while there\u2019s so much choice around, obviously, people are holding back. They are holding back.
\nKevin<\/b>:\u00a0 It must be an interesting dynamic in the market. You\u2019ve come off a fairly hot time to now a difficult time, and your communication with sellers is probably one of the most difficult things you have to do right now because I imagine there would be a number of people who want to get out but can\u2019t get back what they paid for their properties.
\nKorgan<\/b>:\u00a0 No doubt. In the last three, four, even five years, if someone is looking to exit the market, in the current climate, it\u2019s certainly going to be a challenge. It just means people need to either accept the status of the market and make decisions accordingly or be prepared to ride out the next two, three years, what we believe where it\u2019s probably going to remain a little bit flat, and obviously, maybe in the medium-term, things will pick up from there.
\nKevin<\/b>:\u00a0 How has that impacted rental returns?
\nKorgan<\/b>:\u00a0 We\u2019re seeing yields at the moment for housing and units combined somewhere around 5.5%, so they\u2019ve come back a little bit, as well. Average housing at the moment, around $550 for an apartment, somewhere around $400 per week. Vacancy rates are sitting somewhere around 9% and have sat there for probably a good two, three quarters now.
\nKevin<\/b>:\u00a0 That\u2019s a pretty big number, isn\u2019t it \u2013 9%?
\nKorgan<\/b>:\u00a0 Yes. Again, two, three years ago, it was probably less than 50% of that, so we\u2019re facing right now a market where both the values in terms of the volume as well as the actual values have dropped, and equally, on the rental side, we\u2019re seeing vacancy rates up and rental values drop in some instances, Kevin, up to 20%.
\nKevin<\/b>:\u00a0 Korgan, what\u2019s on the horizon? Are there any developments coming up, infrastructure projects that are going to enhance the market a little bit?
\nKorgan:<\/b>\u00a0 There are some positives and some negatives. We\u2019re seeing that the big INPEX gas project brought a lot of confidence back into our market a few years ago. That\u2019s within 12 months of shifting from the construction phase to the ongoing maintenance phase, so that will, we believe, have an impact on the market within the next 12 months.
\nWe have a local election within a few months, so what we\u2019re anticipating is that the government might roll out some spending to bolster up the market and the economy. One of the most significant changes that, as an industry, we\u2019d like to see is the shift from first-home owner\u2019s grant being directed towards new dwellings only to established, and I think that will make a significant impact in improving the status of the market.
\nKevin:<\/b>\u00a0 Just to round out our chat, Korgan, best places to buy right now in Darwin? If I had some money in my back pocket, where should I invest?
\nKorgan<\/b>:\u00a0 I think probably the northern suburbs right now would be the place to be investing in or both investing or buying a home within. There\u2019s good value there. Certain parts, despite the challenging market conditions, are still holding values to some degree. Probably two areas that I would pick would be Jingili and Leanyer. Average house prices are probably a touch over $600,000, mid-$600,000 in both those areas, and I think they\u2019re probably the places to be looking at in Darwin.
\nKevin<\/b>:\u00a0 Very sobering, but thank you for your insight there. Korgan Hucent from Ray White Bayside in Darwin.
\nKorgan, once again, great talking to you mate, and thanks for your time.
\nKorgan<\/b>:\u00a0 Thanks again, Kevin.
\n 
\nChris Gay-<\/strong>
\nKevin:<\/b>\u00a0 We do this every year when we have a look around Australia, and I think this is the first time ever we\u2019ve looked separately at the North Queensland market. So many things happening and Queensland such a big state that we\u2019ve decided to split it up. Joining me to talk about the northern part of Queensland is Chris Gay from Chris Gay Real Estate based in Cairns.
\nChris, thank you for your time.
\nChris:<\/b>\u00a0 Not a problem.
\nKevin:<\/b>\u00a0 A pretty interesting area, isn\u2019t it, North Queensland? We\u2019ll try and focus, if we can, on Mackay north, but it\u2019s interesting to look around in the Cairns market at whether or not those big developments are going to happen that have been on the drawing board for some time, Chris.
\nChris:<\/b>\u00a0 Yes, that\u2019s right. There is a little bone of contention with some of them because they have, unfortunately, dragged the chain a little bit, Kevin. There seems to be some renewed interest in the Aquis development with Tony Fung coming up here recently and meeting with our mayor.
\nKevin:<\/b>\u00a0 Is it going to happen, do you think, Chris?
\nChris:<\/b>\u00a0 I\u2019m still sitting on the fence, I have to be honest. I\u2019m a realist with these things, and while I\u2019d love to see it go ahead, when they turn soil, then I\u2019ll be a lot happier than I am right now.
\nKevin:<\/b>\u00a0 How much does it mean to the area to have a development like that?
\nChris:<\/b>\u00a0 While it would be a very good thing to have, Cairns has a hell of a lot more going for it than just one development such as Aquis. We\u2019ve seen a market turnaround in the last three years with tourism in the town. There\u2019s talk of a substantial increase in the near future with the Navy base. We\u2019ve started to see the odd <\/b>crane <\/b>on the horizon with a new $50 million aquarium being built.
\nThere\u2019s talk of a number of other developments going ahead. There have been some large commercial sales. The local DFO has just been sold for about $40 million, I believe, and they\u2019re doing a $10 million upgrade on that, so there\u2019s more than one area that makes me feel very positive about Cairns.
\nKevin:<\/b>\u00a0 You\u2019ve given us a very good overview about some of the future projects. What\u2019s impacting the market there right now, both from a positive end and a negative point of view?
\nChris:<\/b>\u00a0 Probably from the positive point of view, it\u2019s the actual affordability of the established market. What I\u2019m seeing is a heck of a lot of the mid-range houses between, say, the $350,000 and $450,000 mark that are selling are still below a replacement cost if you were to go out, buy a parcel of land, and then build yourself a new home. To me, they represent fantastic value.
\nThe unit market, residentially, has copped a fairly torrid time over the last few years with some dramatic insurance increases, which have all, obviously, been passed back on to owners. However, we are seeing the Insurance Council start to come in and downsize some of those costs, which is a plus, which is reducing that again. Our rental return market is, I think, very, very good when it comes to an investor return for your bucks on what you\u2019re buying.
\nNegatively, as much as anything, probably the turnaround time on financing has seen spectacular growth. What we have seen, however, is a nice, steady, sustainable growth over the last few years. That, to me, is a heck of a lot safer than some of the other areas that have been reliant on mining, etc.
\nKevin:<\/b>\u00a0 How would you describe investor sentiment in that area right now?
\nChris:<\/b>\u00a0 I think it\u2019s fairly positive \u2013 and it should be because we\u2019re looking, at the moment, on housing at about a 2.5% vacancy factor and on residential units, we\u2019re looking at 2.9% there. That, to me, has always been around a crisis number of available properties to rent, so we\u2019re seeing that rents are certainly doing better than just holding steady; we are seeing increases in them.
\nWe haven\u2019t seen any new unit development in the last four or five years, apart from the bit of government stuff, so that supply and demand situation has basically been very tight over that time.
\nKevin:<\/b>\u00a0 You mentioned affordability as one of the big pluses, and I would have to agree with you. Where is the best buying right now? Let\u2019s look specifically in the Cairns area. What are going to get for our dollars?
\nChris:<\/b>\u00a0 On the south side, you have lower prices. When you look at a city like Cairns, you\u2019re talking probably 20 minutes from the CBD, either north or south to the town. Travel time is not a major consideration that comes into it. But on the south side, you\u2019re buying a nice home for around about $340,000 to $350,000.
\nComing closer into town, of course, you have some more desirable areas \u2013 Whitfield, Edge Hill, Freshwater \u2013 and you\u2019re up well over the $500,000s in a lot of those areas. But there is still the odd smaller property that offers some pretty good opportunity for someone who is prepared to take something on and expand a little bit.
\nKevin:<\/b>\u00a0 The bottom line in closing, if we could, your view about the next 12 months in the Cairns market?
\nChris:<\/b>\u00a0 I think for the next 12 months, we\u2019ll be steady as she goes. I think we\u2019ll probably see somewhere around about 3% to possibly 4% growth, which once again, as I said earlier, is quite sustainable. It\u2019s the type of market I like to see. There\u2019s no whizbang to it, but it\u2019s certainly sustainable and it\u2019s very viable.
\nKevin:<\/b>\u00a0 Good on you, Chris. Thank you so much for your time. Chris Gay from Chris Gay Real Estate in Cairns. Thanks, mate.
\n 
\nAndrew Wilson-<\/strong>
\nKevin<\/b>:\u00a0 <\/b>As we continue to look around Australia at the different markets and what\u2019s ahead for us \u2013 a bit of a mixed market, a bit of a mixed bag \u2013 as you\u2019re probably already hearing, let\u2019s get a national overview. Joining us, Dr. Andrew Wilson, Chief Economist at the Domain Group.
\nAndrew, thanks for your time.
\nAndrew<\/b>:\u00a0 Thank you, Kevin.
\nKevin<\/b>:\u00a0 A little bit different in the show this time. When we talk to you, we\u2019re going to look at a national view. Normally, when we talk, we talk about auctions and so on, but a bit of a mixed bag all around Australia is what we\u2019re hearing. There are some cot cases, and there are some areas where it\u2019s still ticking along quite nicely, Andrew.
\nAndrew<\/b>:\u00a0 Look. I think the big picture, Kevin, is that we have a new reality in our housing markets this year, particularly if we look at the capital city energy, and that is that we\u2019re certainly getting a convergence of growth rates.
\nThe great booms in Sydney and Melbourne are now behind us, and I think we\u2019re going to generally see a flattening of house price growth this year. I think that house price growth through the cycles now will be in a range of perhaps 2% to 4%, 2% to 5%, depending on local conditions. I think we\u2019re going to have quite a flat year this year.
\nA lot depends, of course, on the underlying drivers, and that particularly means interest rates, but I think that even if we did get a cut in interest rates, it wouldn\u2019t revive markets to the extent we\u2019ve seen in previous cycles.
\nMarkets are a lot more predictable, a lot more certainty, and I think that buying and selling decisions will reflect individual factors rather than whether it\u2019s a good time to buy or sell. So look, a quieter year this year for prices growth, particularly in Sydney in Melbourne, and as I said, I think the future is a future of modest price growth, and I think we\u2019re seeing that evolve now early days in the year.
\nKevin<\/b>:\u00a0 Some cot case markets, like Northern Territory, probably Western Australia, South Australia, maybe even the ACT. Would you categorize those as fairly tough markets right now, Andrew?
\nAndrew<\/b>:\u00a0 There\u2019s no doubt that the down turn in the resources sector has impacted the Darwin and Perth markets, and the particular factor there was the waning of the fly-in, fly-out mobile work force. That really did create significant levels of demand for property, whether rental property or for purchasing. With the downturn in the resources sector, that\u2019s certainly taken that demand away, and we\u2019ve seen prices in the Perth market at their lowest levels for two years and certainly down, as well, as in Darwin.
\nBut look, I expect those markets to start to bottom out this year. I think the rate of decline will start to actually moderate, and I think that there may be some capacity for some small prices growth towards the end of the market. I think what we\u2019ll see in Perth and Darwin is the value buyers starting to recognize that there are good opportunities to get into the market at the bottom of the cycle.
\nKevin<\/b>:\u00a0 Yes, if you\u2019re willing to get in now and hold for a while, it\u2019s obviously good buying with low interest rates, as well. How would you describe investor sentiment right now?
\nAndrew<\/b>:\u00a0 Obviously, we had higher interest rates last year, Kevin, which took the top off that investor market, which was very strong, particularly in Sydney. But investors were quite strong right across the board. Investors were activated with those low interest rates.
\nWe have seen a slight sense of a rebound after a falling away of investor activity, and I think that investor activity will be quite solid this year continuing forward. Yields, even though they\u2019re between 4% to 5% in most markets, are still attractive when compared to underlying yields for other asset classes in the economy, and of course, there are still significant taxation advantages for being a residential property investor. I think that we\u2019ll continue to see quite reasonable activity levels going forward in most capital markets this year.
\nKevin<\/b>:\u00a0 Now, you\u2019ve just released your rent report, too. What did you learn from that? What did that tell you?
\nAndrew<\/b>:\u00a0 Very interesting results in our March Quarter Rent Report, Kevin. We\u2019ve seen that unit rents are actually on the rise. We recorded unit rent increases in Melbourne, Sydney, Canberra, and Hobart.
\nIt\u2019s been a little counterintuitive because we\u2019ve seen strong development of high-rise apartments, particularly over the last two years in those eastern seaboard markets. Most markets have seen higher levels of apartment development, but it\u2019s certainly having no impact on demand for rental properties.
\nWhat I think we\u2019re seeing in a lot of those eastern seaboard markets, there\u2019s a shortage of houses for rent, and I think we\u2019re seeing tenants starting to pick or choose as an alternative units, and that\u2019s pushing rents up.
\nKevin<\/b>:\u00a0 Where is the best buying right now if you look around at some of the cap cities, Andrew?
\nAndrew<\/b>:\u00a0 As I said, I think we\u2019re looking at the bottom of the market in Perth, so opportunity is knocking there. I think sellers would be quite ready to deal in those markets. Some of the underperformers have been quite strong over the last 12 months \u2013 I\u2019m talking Canberra and Hobart.
\nHobart has been a market that has revived over the last year. Hobart offers the highest yields of any of the capital cities at the moment and still upside for capital growth. But investors tend to look sideways at that Hobart market. Perhaps, they will take a closer look this year, particularly given it remains the most affordable capital city market in the country.
\nKevin<\/b>:\u00a0 Yes, interesting that both Hobart and Brisbane were tipped as probably some of the best investment markets, and you\u2019re right; I think Hobart traditionally has been overlooked. Why is that do you think?
\nAndrew<\/b>:\u00a0 Perhaps it\u2019s an off-shore market, Kevin. It has had problems with its economy. Of course, traditionally, it has had the highest unemployment in the country. It still has high unemployment. But there\u2019s a definite chronic shortage of rental properties or houses in Hobart. Its vacancy rate is now at 0.7%, and that\u2019s very, very low. There\u2019s no wonder that rents are rising at the fastest rate of any of the capital cities down in Hobart.
\nAlso, prices are rising, and I think that\u2019s a reflection that that market was flat for a couple of years when interest rates started to fall, so it\u2019s in catch-up mode. I think there are some good opportunities there in the Hobart market, particularly given that markets such as the other resource markets of Western Australia and the Northern Territory have been flat.
\nBut look, I think there are still reasonable opportunities for investors in most capital city markets. I think the positive fact is that we\u2019re not looking at any of those extreme price scenarios that we\u2019ve had over recent years. There\u2019s a lot more stable capital growth prospects in most capital city markets.
\nKevin<\/b>:\u00a0 Andrew, great talking to you. Thank you very much for your time.
\nAndrew<\/b>:\u00a0 Thank you, Kevin.
\n 
\nPeter Koulizos-<\/strong>
\nKevin:<\/b>\u00a0 As we continue our look around Australia, this time, we\u2019re going to have a look at South Australia. Been in for a bit of a hard time in recent times, but what\u2019s happening ahead for the future? Joining me, a man who is commonly known as the Property Professor \u2013 Peter Koulizos.
\nPeter, Thank you very much for your time. Tell me about South Australia. What are you seeing there now?
\nPeter:<\/b>\u00a0 We\u2019re getting a bit of a mixed bag here, Kevin. We\u2019ve got bad news so far as the Whyalla Steel Mills and Arrium not going so well. We\u2019ve also got the impending closure of Holden\u2019s next year. But the good news is I\u2019ve never seen so much infrastructure going on in my state in my life.
\nWe have the new Royal Adelaide Hospital, which will be completed later this year, some major road upgrades \u2013 and number one would be the upgrade of South Road between the River Torrens and Torrens Road. There\u2019s a relatively high number of cranes in the CBD, building public and private infrastructure. So yes, economically, the news is a mixed bag.
\nKevin<\/b>:\u00a0 I was going to ask you what are the positives and negatives, and you mentioned a couple there. Of course, Holden closing down, we\u2019ve known about that for some time. Recently Whyalla looks like it might be in for a bit of a tough time, almost needing a $2 billion bail-out. But isn\u2019t it interesting, Peter, how where there has been a lot of adverse news about a lot of industries in South Australia, the federal government propping it up with a lot of infrastructure projects \u2013 which is what you\u2019re talking about \u2013 to try and balance it all up?
\nPeter<\/b>:\u00a0 That\u2019s right. The state and the federal government are certainly taking up some of the slack, but the perception here is that if we get the submarine contract, all will be fantastic. And if that is people\u2019s perception that turns into a reality, then that would be lovely. It would certainly be good for South Australia, but it is not the be-all and end-all.
\nWhat we need here is a bit more consumer and business confidence, but thankfully we are sitting pretty with the federal election coming up. South Australia is a key state as far as the Liberal Party is concerned, so I would expect a few more announcements between now and July when the federal election is scheduled to be held.
\nKevin<\/b>:\u00a0 What is the balance like in South Australia between Adelaide and the regional areas? Do you think a lot of this infrastructure development is happening in Adelaide, or is some of it being stretched out to the regions, as well?
\nPeter<\/b>:\u00a0 Most of it is in Adelaide, Kevin. The regions aren\u2019t doing so well. They are hurting fiscally. We\u2019ve just talked about Whyalla. In Port Augusta \u2013 which has a number of industries, but one of them is where our electricity is generated \u2013 one of the substations is being closed down because I suppose it\u2019s good news here in South Australia, we\u2019re generating enough of our electricity through solar panels.
\nAlso a town nearby Port Augusta called Leigh Creek, which had a brown coal mine that was used for generation of electricity, has also had to close down. The mine shuts down, and so the whole town is closed down.
\nIt\u2019s a very interesting time in South Australia, but there has also been of late some very positive property news.
\nKevin<\/b>:\u00a0 How would you describe investor sentiment right now?
\nPeter<\/b>:\u00a0 South Australian investor sentiment is okay. What\u2019s really propping up the market, Kevin, is the interest from eastern state investors. In Sydney, for example, where the median house price is a million dollars, it is very hard to buy an investment property in Sydney because you need to fork out several hundred thousand dollars. But you come to some very lovely areas here in Adelaide and $250,000 to $300,000 will get you a two-bedroom [4:07 inaudible]<\/b> unit very close to the city, or even $300,000 to $350,000 will get you a house on a decent block in the Brisbane equivalent of Redcliffe or Woody Point.
\nThere is a lot of interest. I know there are a number of buyer\u2019s agents buying for their clients in Adelaide, and there are also a lot of people off their own back either coming to Adelaide and looking for property or just buying sight unseen off the Internet.
\nKevin<\/b>:\u00a0 That draws me to my next and probably final question, too, Peter, if I may. What are some of the areas you think are good buying right now, let\u2019s say in Adelaide, and what are some of the areas that you would avoid?
\nPeter<\/b>:\u00a0 The good areas: I would stick to the inner western suburbs like Mile End, Thebarton, Torrensville, Cowandilla, Hilton \u2013 they\u2019re all at various stages of gentrification. To that mix, I would also add Croydon and West Croydon. A prospect that is also close to town just on the northern edge of the CBD is also a good prospect so far as investment is concerned. Or you look at some of your coastal suburbs. Australians and Adelaide people in particular, are very keen on lifestyle and in particular, lifestyle by the sea, so our coastal suburbs are also doing very well.
\nAreas that I would avoid at this stage for the short to medium term would be areas around the Holden plant, in particular around Elizabeth and Salisbury because even though it won\u2019t be the end of the world \u2013 because we\u2019ve had car manufacturers close down before \u2013 it will have some impact on the local property market and the local economy, so prices will probably drop a bit and rents will probably also drop a little bit.
\nKevin<\/b>:\u00a0 PropertyProfessor.com.au is where you\u2019ll find Peter.
\nPeter, thank you so much for your time and that insight into the Adelaide market.
\nPeter<\/b>:\u00a0 Thank you very much, Kevin. My pleasure.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

George Raptis tells us that while Sydney is taking a breather, it is still performing well.\u00a0 Good properties are short and demand is strong.\u00a0 He says developers are going crazy. Korgen Hucent gives us a sobering report on the Northern Territory and that the oversupply…<\/p>\n","protected":false},"author":176692471,"featured_media":4180,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,24],"tags":[103],"class_list":["post-7764","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-shows","tag-podcasts"],"yoast_head":"\nDon\u2019t discount SA + Sydney takes a breather + Face the new property market \u2018reality\u2019 - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/dont-discount-sa-sydney-takes-a-breather-face-the-new-property-market-reality\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Don\u2019t discount SA + Sydney takes a breather + Face the new property market \u2018reality\u2019 - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"George Raptis tells us that while Sydney is taking a breather, it is still performing well.\u00a0 Good properties are short and demand is strong.\u00a0 He says developers are going crazy. 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