Increased demand anticipated for Adelaide land

Industry research group BIS Shrapnel has forecast a ‘moderate’ increase in demand for new residential land in South Australia, indicating that it may be a great time to step into the real estate market.

Sydney and Perth are both expected to see the biggest growth in demand for residential land, due to a combination of low levels of new dwelling construction, weaker house and land prices and recent affordable changes to interest rates.

In contrast, moderate growth is expected for both Adelaide and Melbourne as a result of the “unsustainable” levels of activity that were recorded in both cities after the global financial crisis.

These findings come from the BIS Shrapnel report series Outlook for Residential Land, 2013 to 2018. According to the report’s author Angie Zigomanis, there were a combination of factors that contributed to the strong activity experienced immediately after the GFC.

Firstly, lot production of land in Adelaide continued to run at a relatively high level. In addition to this, first home buyer incentives in South Australia and lower interest rates combined to sustain the activity in the market.

The report states that lot production in the outer areas of the city averaged around 3,900 lots per annum over the 2008-2009 and 2009-2010 periods.

As a result, there was a slight excess of dwellings in Adelaide which eventually lead to decline in lot production during 2011-2012 and 2012-2013.

Despite this, the continued decrease in interest rates have had the welcome effect of increasing housing affordability, and Mr Zigomanis expects that this will lead to a moderate increase in the demand for new houses.

However, BIS Shrapnel also anticipates that the Reserve Bank will look to lift the cash rate from its current level from 2015, so now could be a great opportunity to organise your home loan application and take advantage of current interest rates.