South Australia Outlook First National Real Estate State Chair, Russell Burton, anticipates South Australia’s house, land and unit prices will rise in the coming six months by no more than 5 per cent, given anticipated interest rate rises and the ending of the First Home Owners Grant Boost. This follows increases of between 5-10 per cent in the last six months, due mainly to increased first home buyer activity and the attractiveness of low interest rates. Mr Burton anticipates vacancy rates in the region to stabilise in the first six months of 2010 and rents to rise by no more than 5 per cent, due mainly to the unchanged supply and demand conditions of the past 12 months. Currently, Mr Burton attributes around 1-5 per cent of South Australia’s sales activity to investors and expects this to increase by between 10-20 per cent in the first half of 2010. “Investors will continue to be attracted back into the market, as competition is reduced from first home buyers, returns improve and property offers a solid alternative to the stock market as an investment choice,” Mr Burton said. “Investors will go some way to replace first home buyers in sales activity although I expect first home buyers will continue to play a role in the market on an ongoing basis. “The demand for rental property should continue, with a major portion of first home buyers having already left the rental market and stimulation from industry growth and immigration continuing.” Interest rates are predicted to increase in the first six months of 2010, which is expected to have a negative impact on affordability. “Obviously affordability will be affected in a negative way with any interest rate rise however, I believe the rise should only be marginal, not much – if anything, no more than 1 per cent over the year,” Mr Burton said. “But this is dependent on many factors and any increases should be offset by a strengthening economy and subsequent rise in rents.”
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