Mining and infrastructure to create South Australian property gold in 2018

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End Facebook Pixel Code [if lt IE 9]> <link rel="stylesheet" type="text/css" href="/sites/all/themes/saturday/css/ie.css" /> <![endif]StartFragmentHuge investment in infrastructure, stronger resource prices, and relative affordability will increase South Australian real estate activity and values in 2018.EndFragment

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A massive investment in infrastructure coupled with stronger resources prices and property affordability will increase South Australian real estate activity and values in 2018, according to leading property group, Raine & Horne.

“After five years of strong returns in Sydney and Melbourne, investor attention will start shifting to the Adelaide real estate market in 2018,” said Michael McDonald, General Manager, SA Raine & Horne.

The case for Adelaide

“For starters, the median Adelaide property value is around $430,000, which is virtually equivalent to a house deposit in Sydney,” said Mr McDonald.

“Moreover, the massive infrastructure investment currently underway, will continue to create plenty of jobs and economic growth, which augers well for Adelaide property longer-term.”

The South Australian Government announced a record infrastructure spend last year of $2.2 billion that is well above the state government’s average annual commitment of $1.5 billion. The total infrastructure investment of $9.5 billion over four years is expected to support 5,700 extra jobs on average annually.

Mr McDonald noted, “The jobs growth from infrastructure is in addition to the 10,000 new jobs created in South Australia over the past couple of years in a range of growing industries.”

A further $1.5 billion will be spent on public transport, while South Australian roads will receive $1.9 billion. Other major infrastructure projects include the $50 billion contract to build a new fleet for the Australian navy.

“The combined state and federal government spending on infrastructure will provide the necessary shot in the arm for the state economy, and consequently, Adelaide property prices should benefit with an average of 3-5% p.a. plausible over the next three years or so,” said Mr McDonald.

Rebounding commodity prices to drive regional activity

A rally in commodity prices is news for regional South Australian towns such as Roxby Downs, Whyalla, Port Lincoln, as well as Port Augusta, which stands to benefit from the construction of nearby Oz Minerals’ Carrapanteena copper and gold mine, noted Craig Sumison, Principal, Raine & Horne Roxby Downs. Copper prices, for example, are up by about 20% over the last 12 months.

“The Olympic Dam Mine that contains a mix of uranium oxide, copper, gold, and silver is undergoing expansion and maintenance work, which will contribute to more mining specialists moving to nearby Roxby Downs,” said Mr Sumison.

“The resources downturn hurt the town and property values accordingly, with rental vacancy rates blowing out to almost 10%. So, the increase in worker numbers at Olympic Dam augers well for the local real estate market, with vacancy rates already down to 1.5%.

Apart from a rise in full-time employees, Mr Sumison said there had been an increase in Drive-in-drive-out (DIDO) contract workers over the last six months.

“More contractors are helping to force down vacancy rates in Roxby downs,” he said.

“The combination of low vacancy rates, investment yields of almost 5%, a median house price of $225,000 and a stronger economy will ensure that Roxby Downs is on investor radars in 2018.”

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Source: https://www.therealestateconversation.com.au/blog/michael-mcdonald/mining-and-infrastructure-create-south-australian-property-gold-2018/adelaide

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.