Land the cru­cial miss­ing fac­tor

The Advertiser - Real Estate - - Front Page -

THERE has been plenty of talk re­cently about Aus­tralia’s two-speed econ­omy. It’s party time for the min­ing in­dus­try, which is swim­ming in ex­tra cash – ex­hibit A is BHP Bil­li­ton’s $22.6 bil­lion an­nual profit an­nounced a lit­tle more than a week ago. How­ever, many other busi­ness sec­tors, in­clud­ing re­tail, man­u­fac­tur­ing and ex­porters, are on strug­gle street and cut­ting jobs.

A two-speed econ­omy is a tricky one to con­trol for our gov­ern­ments and the in­de­pen­dent Re­serve Bank of Aus­tralia as ef­forts to fix things in one area can make an­other area sick. How the au­thor­i­ties get us out of this one will be in­ter­est­ing to watch.

Just like the na­tional econ­omy, South Aus­tralia’s real es­tate mar­ket is dis­play­ing more than one speed.

Un­for­tu­nately for in­vestors and sell­ers, some of those speeds are in re­verse.

The lat­est data from the State Gov­ern­ment shows met­ro­pol­i­tan Ade­laide’s me­dian house price slumped 1.2 per cent last fi­nan­cial year to $405,000.

There were some pos­i­tive pock­ets, with cen­tral metro Ade­laide up 0.7 per cent but in­ner metro Ade­laide took a beat­ing, down 3.1 per cent to $618,500.

Ade­laide apart­ment sales halved in num­ber and the me­dian price slumped 12.7 per cent to $370,800.

Our coun­try prop­erty fared bet­ter, although the me­dian house price for ru­ral growth ar­eas was still down 0.6 per cent over­all to $268,500. Such re­gional cen­tres as Port Au­gusta (up 8.5 per cent), Mount Gam­bier (up 5.7 per cent) and Port Pirie (up 4.7 per cent) bucked the trend.

How­ever, my spies tell me that sev­eral towns out­side the min­ing hot zones are do­ing it tough, with a glut of houses that just aren’t selling.

So how do we re­act to this multi-speed prop­erty mar­ket?

Well, don’t ex­pect much from state or fed­eral gov­ern­ments, which are up to their necks in other is­sues.

And the Re­serve Bank isn’t go­ing to take SA into ac­count too much when it de­cides on its next in­ter­est rate rise or fall, con­sid­er­ing we’re a rel­a­tively small part of the na­tional econ­omy.

For prop­erty in­vestors, the key is to avoid try­ing to time the mar­ket. Take a long-term ap­proach and ig­nore the short-term ups and downs as these cur­rent falls may be among the most volatile SA’s real es­tate sec­tor has seen for many years.

Try­ing to time the mar­ket is also dan­ger­ous for home buy­ers and sell­ers. If you buy and sell in the same mar­ket, whether it’s ris­ing or fall­ing, it’s un­likely you will be a long-term loser.

The big­gest risk – par­tic­u­larly in to­day’s cli­mate – is to buy a new home without selling your ex­ist­ing home. Not only is there likely to be painful bridg­ing fi­nance, the chance that the home you’re selling won’t fetch what you need is higher than nor­mal.

Pa­tience and a com­mon­sense ap­proach are the best way to sur­vive a mar­ket that’s go­ing both for­wards and back­wards.

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