"Interesting FHOG effect, Adelaide"

From: Duncan M


It seems the combination of FHOG and Low Interest rates have actually DECREASED the vacancy rate in Adelaide. Investors keen to take some profit from the overheated market have sold their rental properties and reduced the pool of available properties.

Adelaide is experiencing its lowest Rental Vacancy rate in years.. all according to an article in the Advertiser quoting REISA.

Regards,

Duncan.
 
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Reply: 1
From: J Parker


That is interesting. Why, then, isn't it happening in other capital cities? Anyone care to theorize here?
Cheers, Jacque :)
 
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Reply: 2
From: Ian Parham


'Evening Duncan & All

Yes, read that article on the net this morning. Seems that Adelaide once again experiences property orientated impacts to a greater degree than other states ie: 10% National quota of FHOG. (Pity capital growth in the past wasn't as aggressive).

This (impact) may also be applicable to any potential down turn...if ever it arrives! Or, is Adelaide simply at the stage where population has grown, money is easy to get, property is in short supply, and now as a result future capital growth should be fairly well insulated from the dramatic types of downturns other states have experienced in the early 90s (remembering that Adelaide went for an eternity with sweet bugger all growth, 1.5%, 3%...seemed like years!!).

In essence, it may be a bit of a boon for IP people in Adelaide in so far as riding any cyclical downturn...the landing may be softened perhaps.

I tend to think also, that the market has (as discussed on the forum from time to time) been driven by the media fetish with IP over the last two years or so...all the TV shows going around have suddenly turned all the mums and dads into property investors....all available supply has been soaked up. EG: Sim now owning Colonel Light Gardens ;>)

It was interesting the reference in the article to people's upbeat view of Adelaide economically etc. Adelaide is a bit like going to a Crows game...if they are in front everyone is cheering...if they are behind, you can hear a pin drop!! When Adelaide's economy, unemployment level and ambience is under the pump...property 'used' to feel the pinch too. Though I think things are a tad different these days...I really feel the local real estate market will get stronger. I have been away from SA for 6 years now, but have kept an eye on real estate during that time...The place is showing solid, steady growth right across metro Adelaide...even outer northern suburbs!!

Finally, given the article was written in part by an agent, I thought at first...oh here we go...but I must admit that when thinking about what has happened, and is continuing to do so in SA, that perhaps the whole article isn't too far off the mark.

Certainly I think people can find confidence in Adelaide property....confidence which not that long ago seemed very rare.

I'll post the link below.

http://www.theadvertiser.news.com.au/common/story_page/0,5936,3398882%255E2682,00.html

Oh, bugger me!...anyone know how to put in these damned links?? Help!!!

Otherwise, any further comments from SA investors???

Cheers Ian
 
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Reply: 2.1
From: Michele B


Well I've noticed the RE section in the last three Saturday editions of 'The Advertiser' has run to 72 pages matching the previous (to my knowledge anyway) high of appx 18 months ago. Lots of houses on the market.

Plus a LOT of inner-city character cottages are For Sale when previously they'd have been sold before or at auction - I imagine many of these have been passed in, the vendors holding out for the high prices quoted by their agents and achieved by their neighbours only 3 months ago.

And despite Barry Magain's (REISA) protestations, I reckon the rental market is still quiet - at least in the areas I know.

Michele
 
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Sim

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Reply: 2.1.1
From: Sim' Hampel


Speaking of which, now might be a good time to announce a new (and as yet incomplete) section of my website... the real estate page count chart.

http://repage.hampel.com.au/

I am endeavoring to count and chart the number of pages in the Adelaide Advertiser Real Estate liftout each Saturday. (Thanks for the idea Michele !)

Comments are welcome, as is missing data - refer to the data page and help me fill in any blanks in the number of pages - data further back in history is useful too if you have it !

I will try and put some analysis along with the data and point out events like the Christmas slowdown and such which may skew the data. It looks very interesting so far.

 
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Reply: 2.1.1.1
From: Dee Mee


Hi
great chart sim
another idea - how about charting the nos of columns the rental section is in saturday's paper, and super imposing it on the chart!!!

I agree with mb, the area's ive been monitoring - inner city - rental market has been poor, ie the upper end has dropped off - one particular place ive been watching has been advertised for 260 for 3mths, and then 245 for 1mth, and still not leased yet

Dee
 
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Sim

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Reply: 2.1.1.1.1
From: Sim' Hampel


Good idea Dee... unfortunately I've thrown out all my old copies of the Advertiser and just kept the RE Liftout... but I'll start with what I have ;-)

I would also like to superimpose the auction clearance rate figures on the chart as well... I think it would be very interesting to see. Does anyone know where I can get these figures for Adelaide ?

Other suggestions I have had are charting the change in property values as well.

 
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Reply: 2.1.1.1.2
From: Ian Parham


Good morning Michele, Dee, Sim & All.

It seems I have been out of touch with some of the more intricate nuances of the the Adelaide market..both rental and re-sale. Thanks for the input people...very valuable info. Interesting your observation of inner city cottages Michele...I wonder why people are shifting their attention away from these....do you think it may be they are just going for the abundance of new apartments etc to take advantage of the FHOG?

Michele, how do you see the copious amount of new inner city appartments in the overall scheme of things. Seems to me they aren't moving very quickly at all. Although I must admit I have been tempted to find out more about some of the smaller developments happening around Wright and Gilbert Streets.

But what of the future for capital growth in the suburbs? Agreed, the rental market is probably going to stall for a while, and agreed a lot of vendors expectations may not be met when the re-sale values fall away. Perhaps the suburbs that have been regular steady 'growers' will continue to do so. Maybe the Daw Parks, Edwardstowns etc that have been on a ride will now taper off fairly smartly.

The FHOG being applicable to newly constructed dwellings must come to a halt, unless the grant is extended again. Surely the supply of 'new' repro fed villas etc is drying up too. So what of the older properties in suburbs such as mentioned above? People can at best get 7K FHOG for these...who else is buying them up...or perhaps Mr Magains rhetoric is not entirely indicative of the real market??

Would any of you seasoned SA investors care to comment on my thoughts re Adelaide population, future availability of jobs, overall sentiment towards the state...and indeed any impacts on property market over next few years.

Is the state really that upbeat at present???

What about any potential development of inner metro areas in the future? Such as the emergence of Brompton a few years ago, Mile End more recently...are there other current, or former light industrial areas being touted or targeted for redevelopment?

Haven't been to your web page yet Sim....am just about to after this is posted!

Cheers Ian
 
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Reply: 2.1.1.1.2.1
From: Kevin Forster



Actually I haven't noticed any effect on rentals in my part of Melbourne (outer SE suburbs). The pages in the local papers are about 2 pages of rentals.

I think certain areas of Sydney and Melbourne are suffering because of every man and his dog investing in that area as it has been a boom area or in that 5km zone of the CBD.

Sometimes it pays to be a contrarian investor.
 
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