Adelaide - at market peak cycle ??

[mingling]

Dear All,

The Property Update Newsletter - Is 2008 The Right Time To Invest? from Michael Yardney.

Boom Cycle - Adelaide and Canberra
Upturn Cycle - Melbourne and Brisbane
DownTurn Cycle - Perth and Darwin
Stabilisation - Sydney

Does that mean Adelaide and Canberra are in the market peak of property cycle ?? Should we avoid Adeliade and Canberra for Now ?

Appreciate all the response

 

[Ausprop]

I don't know about Adelaide but first of all you have to appreciate this is an opinion not a fact. You also need to realise these are very broad generalisations - go to the suburb of Dalkeith in Perth and tell the agent the area is in downturn and you will be laughed out of the place

 

[mystery]

Dear All,

The Property Update Newsletter - Is 2008 The Right Time To Invest? from Michael Yardney.

Boom Cycle - Adelaide and Canberra
Upturn Cycle - Melbourne and Brisbane
DownTurn Cycle - Perth and Darwin
Stabilisation - Sydney

Does that mean Adelaide and Canberra are in the market peak of property cycle ?? Should we avoid Adeliade and Canberra for Now ?

Appreciate all the response

On Michael Yardney's property cycle diagram ... Adelaide is only at 10 O'clock, .. still plenty of room for further upside I would imagine. I have a couple of IP's in Elizabeth South and Vale and both had growth around 45% last year, .... that will probably pullback to 10%-15% this year, but that's still a good return.

Other areas of Adelaide are underpriced and there is a general feeling that the market has overlooked them in 2007, but predictions are that that will change this year, ... suburbs like the Salisbury area and I'm sure there are others.

I'm sure other people who are far more experienced with the Adelaide market than I am can correct me or offer more detailed information.

Martin

 

[sash]

Hmmmm....Adelaide market at the peak???? Not based on the conversations that I have had with real estate agents. The Adelaide market has a fair way to go....a lot of the experts did not pick Adelaide and bet on Brisbane going up.

My feeling is that Adelaide has at least two years due the following:
1. The Northern Surburbs of Adelaide is having substantial spend from Defence and Infrastructure (Northern Expressway)

2. For the first time in many years immigrants are chosing Adelaide. In particular the British. Immigration to Adelaide has increased from 5,000 odd to something in the order of 11,000.

3. Due the demand for resources Roxby Downs is going to quadruple in size. The people there will rent there but will probably buy in Adelaide for lifestyle reasons.

4. The median price of Adelaide is on par with Hobart at about 330K. Incomes are higher in Adelaide.

5. Defence industry is more immune to a slow down and their projects last for 10-15 years. So far the submarines and some of ships will be built in Adelaide. Additionally the Edinburgh base in Salisbury is expanding.

6. Last week BAE announced the takeover of Tenix...they are based on Salisbury I believe. See the Adelaide advertiser for details.

7. The stuff I bought in Adelaide in the Northern surburbs is gone up 20% in a matter of 5 months. Sub 200k properties are now only available in Elizabeth, Davoren Park, & Salisbury North....most of these are maisonettes. You will find the occaisional one in other areas but is quite rare.

My gut feel growth in Adelaide will not peak till the median hits about 400K median...based on a 330K current median this leaves about another 25% gain to be had. This should take about 2 years.

My thoughts anyway.

 

[Michael Yardney]

Dear All,

The Property Update Newsletter - Is 2008 The Right Time To Invest? from Michael Yardney.

Boom Cycle - Adelaide and Canberra
Upturn Cycle - Melbourne and Brisbane
DownTurn Cycle - Perth and Darwin
Stabilisation - Sydney

Does that mean Adelaide and Canberra are in the market peak of property cycle ?? Should we avoid Adeliade and Canberra for Now ?

Appreciate all the response

Thanks for reading my newsletter.

What I was trying to depict graphically is where each state is in the broader property cycle.

I was trying to show that there is less upside left in Adelaide and Canberra than there is Melbourne or Brisbane and I explain it in more detail in this article.

I am not suggesting that either market has peaked or is near itspeak - our research suggests that most markets will have a year of consolidation and not the strong growth of last year. But there are still a few years yet before the property markets peak.

We have only really just begun in the current cycle on the east coast.

As for Perth, in general the market has been flat - overall 3% growth, but of course some suburbs have done better than others. It's the same in each state.

I explain all this in a bit better detail in a FREE WebCast replay you can access at this link. vI have also asked 4 other proeprty experts for their opinions on the state of play of the property markets around Australia.

You can listen to it or download it for later listening by clicking here

 

[Dazz]

first of all you have to appreciate this is an opinion not a fact. You also need to realise these are very broad generalisations

Exactly right Ausprop on both counts.

IMO, when one talks about general property markets, medians and state by state comparisons, these are the things of commentators and salesmen, not individual investors. Why ?? Because Joe Blow cannot buy the Victorian property market or the Queensland residential market. All they can buy is number 37 Richfield Parade in Kooyong or number 12 Invicta Loop Indoorapilly.

This is where the individual property title deed differs so markedly from the bog standard BHP share or it's CML equivalent.

Over here in Perth, the people have had 25% again (on the back of a whopping 46% the previous year....not bad for a downcycle) if they owned an upmarket piece of dirt, or -5% if they had a slice of drossville. Hardly anyone has actually had 3%. She's a two-tiered ressy market over here. The haves and have nots are wide apart....as evidenced by the increase in the Liberal vote during the Fed election.

FWIW, I also don't believe (pertaining of course to my holdings only) the current property clock being put out by these "experts". What's driving the underlying demand in my properties is far far bigger and more powerful than any cycle in the conventional property wheel of fortune. Multi-decabillion $ contracts for three or four decades have a certain stabilising effect. They don't go away in a hurry. Although, to be fair, the very first and original Woodside contract to supply LNG, executed back in late '83 is due to expire in the next year or two.

However, if you are looking for someone to hold your hand and strip some of your responsibility away for looking after your money, then by all means listen to the experts.....just take a good long detailed look at the contracts their solicitors have drawn up for you to sign before jumping on board. Cos, at the end of the day, that's where all of this 'free' info and downloads is pointed....IMO.


As to your original question, where is the Adelaide cycle at ?? I have absolutely no clue, as I don't believe or follow these cycle things. never have - never will, and I think that philosophy has served me well.

What I do know is that we just bought a property there, and with the fundamentals that came with the individual title deed, we are cautiously optimistic it will do just fine and dandy. Now what some median house price in Elisabeth West, or Glengowrie, or Burnside or Munno Para does is of no concern to us at all. My question to you mingling is - what is your research showing you ??

 

[Bushy]

Adelaide is at its peak, like it was last year and the year before that, it always has lower growth than any of the other capitals, it has no population growth, no employment and its a really slow country town, it is never recommended by experts so if I was in another State I woudn't even bother about the place.

my tongue has just passed thru my cheek.

As Dazz said, do your own research and act on it. I'm glad we didn't listen to the experts.
Regards Bushy

 

[mingling]

Thanks all for the reply.

I am not be able to articulate well on the facts and any fundamental research done. However, it's my guts feeling and feedback gathered there are more rooms to grow in Adelaide. Particularly of properties within my price range (mid level).

Your valuable sharing presented here are much appreciated. We have committed one IP at Adelaide and going for another one soon.

Cheers.

 

[stumunro]

Very very important to understand fundamentals of property appreciation, before making any judgements. Market downturns or upturns or booms are calculated with macro indicators such as median price, auction rates, rental yields and so on and so on. Like Dazzling has mentioned this outlook does not speak specifically for individual property, but it does give you some good information to work with when choosing what area to invest in. It's always about a numbers game, an averages game, but another factor which is just as important an emotion driven game. Macro indicators are good information, but the individual property is more imporant, I wouldn't dis-credit any property that can grow above the averages but in a "down turning market", but i certainly wouldn't ignore the median growth rates for the area either. Take all information in, it all has some sort of merit and this will help you make a comprehensive decision about where and what you want to buy.

 

[DavidMc]

I think Yardeny's newsletters are great.

I have to add though that 20%+ YTD and 9%+ for the last quarter is a boom in my books for Melbourne.

 

[steveadl]

My feeling is that Adelaide has at least two years due the following:

Some very good points Sash, and I agree - Adelaide still has a while to go yet. We may not have another 20%+ median increase this year, but individual properties wil certainly make that.

Adelaide is at its peak, like it was last year and the year before that, it always has lower growth than any of the other capitals, it has no population growth, no employment and its a really slow country town, it is never recommended by experts so if I was in another State I woudn't even bother about the place.

my tongue has just passed thru my cheek.

As Dazz said, do your own research and act on it. I'm glad we didn't listen to the experts.
Regards Bushy

Good poiny Bushy, all the interstate people can stop buying now - we've peaked! Off to Melbourne & Brisbane everyone!

As far as the property experts go - Adelaide never get's much of a mention anyway. Why? I assume because they are all based in Sydney, Melbourne etc. The proof is in the pudding - Adelaide has just had the 2nd biggest growth rate in the country last year, and we still only get a small 1-2 paragraph mention about how it was a surprise, and how it's probably already finished.

Sydney is in the doldrums or about to pick up, 2 tier market etc. - they get 3 pages, Perth has levelled off - 2 pages. Melbourne and Brisbane have boomed last year and will probably continue this year - 3 pages. Meanwhile Adelaide didn't have much commentary leading up to it, a few surprised glances last year, and now a lot say it's already over, so no more discussion.

It's ok, we're used to it.

 

[JustaDreamer]

If keystart dont make another misstake again i pick up the keys to a property i bought 20km south of Adelaide which i thought was very cheap after living in perth for last few years. I think some areas in adelaide are unpriced and think adelaide will go up over the next few years, i can see alot of interstate investors coming here seeing its so cheap and lifting the prices.

 

[sash]

Interesting posts guys...looks like the people in the know in Adelaide agree about the potential for Adelaide.

Wouldn't it be funny if Adelaide moves to the number one growth spot surpassing Brisbane and Gold Coast. My bet is that it may happens this year as investors realise how affordable it is and park their money there. Now that will be something to talk about!

It seems that most people are still stuck in the old analysis paralysis that market forces change cities or that the cheaper surburbs don't go up.

I don't see alot of changes in wealthier surburbs in Melbourne and Sydney growing as much this year because those on those highly paid finance sectors are going to be feeling the pinch of the sub-prime crisis...as costs are trimmed in the finance sector.

On the positive side...the so called blue collar jobs (Electricians, Plumbers, Carpenters, Miners, Truck Drivers) are going to be doing well. There seems to be a severe shortage of labour here. This may also push values up in the outer surburbs.......my thoughts anyway....only time will tell.

Also, don't you think all those blue workers who went from the Sydney and Melbourne will be looking to paying cash in the Western surburbs of Melbourne and Sydney.

I am not trying to stereotype here but these blue collar guys are smart...they are not going to want to move into the yuppy surburbs they will pick up a nice home for say 400K and pay cash in Western Syd or Melb.....or god forbid move to Adelaide....he he. Once the mining boom is over they will return to where their families and social networks are......don't laugh
because if China/India has a demand hiccup from the Western world...then it is a possibility.