Adelaide is set to experience “goldilocks conditions” for property prices in the next three years according to a new report, while another forecaster is predicting a slower South Australian economy.
BIS Oxford Economics’ Residential Property Prospects 2019-2022 report has predicted the median property price in Adelaide will hit $550,000 in three years — up from $495,000.
It is expected to have the highest property growth behind Brisbane, which is tipped to have a 20 per cent increase in the next three years.
In Adelaide, the predicted 11 per cent jump has been put down to moderate population growth and a steady supply of housing.
BIS Oxford Economics associate director Angie Zigomanis said the SA property market would have “goldilocks conditions” because “everything is moderate and nothing is extreme”.
“We see Adelaide as a ‘steady as she goes’ market — it’s got fairly moderate population growth,” he said.
“It hasn’t been experiencing an oversupply, like we’ve seen in places like Brisbane and Perth, or a recent undersupply, like in Sydney and Melbourne.
“In the meantime, we think there will be some upside from the point of view of APRA (Australian Prudential Regulation Authority) conditions being removed from some of the bank lenders.
“This will make it easier for some potential borrowers to take on a loan and purchase a property.”
Throughout the country, Brisbane was tipped to have the highest growth in the report, followed by Adelaide, Canberra (10 per cent) and Darwin, Perth and Melbourne (all 7 per cent).
The report stated that while a “weak Queensland economy and high level of dwelling supply” had dampened price growth in Brisbane, affordability, easing credit conditions and lower interest rates could be a “catalyst” for price growth.
It has predicted much of the growth would be concentrated toward the end of the three-year period. Sydney and Hobart were tipped to have 6 and 4 per cent growth respectively.
The report predicted more stability in the Sydney market after an 18 per cent decline in the two years to June 2019 and slower growth in Hobart, which saw a median house price growth of 36 per cent in the three years to June 2018.
Warning over SA’s economy
It comes as Deloitte Access Economics’ latest business report stated that South Australia’s economy will be slowing down.
“The SA economy has performed relatively well of late, burning the naysayers as it received tailwinds from some key positives,” the report stated.
“The low Australian dollar, low interest rates and strong global growth supported the state’s strengths in farming, manufacturing and tourism, while growing spending by governments also contributed to the ongoing growth.
“Housing construction is on the back foot and, although taxpayer spending support for growth remains high, it isn’t rising at the rate that it was.”
The report stated that South Australia has a $2 billion pipeline for infrastructure spending and $104 million to push housing constructions.
Property Council SA takes aim at land tax changes
Property Council SA executive director Daniel Gannon said changes to land tax announced in last month’s State Budget could have a “devastating” impact on the economy.
“We think that they’ll trigger a land tax tidal wave across the state,” he told the ABC.
“We think mum and dad investors, but also institutional investors, could be hit in a pretty big way, which will have a much bigger [flow-on] impact on the economy.
“There’s a number of stings in this particular tail because this time next year, we’ll have the increase to council rates, to levies, to charges as a direct result of the statewide re-evaluation and then the changes to land tax aggregation will also kick in.
“What we’re saying to the Government is simple — we want a fair tax system in South Australia and a fair system that doesn’t disincentivise investors in the market.
“But also a system that doesn’t start eroding the nest egg of property superannuates across South Australia.” The State Government’s changes will regain $40 million in land tax, under a new way of calculating the charge. It is designed to close a loophole that allows property investors to pay less tax.