SOUTH AUSTRALIA OUTLOOK Growth Any increases in investor activity are expected to be around 5 per cent. Investor activity growth will be driven by improved affordability as a result of falling prices, lower interest rates, and higher rents. According to SA respondents, affordability and lower prices will generate the most growth in the upgrader segment in 2012, followed by investors and retirees. First home buyers will be conspicuously absent from the market for the first six months of the year, possibly in the hope that the market has not yet bottomed out and they could still get more for their hard earned savings.
Changing Market Conditions Interest rates are expected to decrease by SA survey respondents with movements in the vicinity of 0.25 to 0.5 per cent, which is expected to instil more confidence into buyers and stimulate activity across the board especially for investors, and potentially for first home buyers. The carbon tax is expected to have an impact on the property market, with 67 per cent of SA respondents saying it will produce higher home and rent prices and reduce consumer confidence.
COMMERCIAL MARKET The South Australia commercial property market is expected to remain relatively stable, with increasing pressure in some areas where demand is met with no supply. Demand is particularly strong for prime quality stock, driven by improved standards of accommodation, better services and energy efficient features. Yields, having been stable at between 7.5 per cent and 9.5 per cent, are expected to tighten to more traditional levels in the coming 12 months. According to the First National South Australia commercial property survey respondents, commercial property prices have been fairly stable with any rises kept to below 5 per cent. Vacancy rates have also remained stable during the year, with any drops kept to below 5 per cent due to reduced demand. Rent movements have been to be kept to below 5 per cent in 2011.
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FIRST NATIONAL REAL ESTATE 2012 PROPERTY MARKET OUTLOOK