Defence contracts, low interest rates, a rise in property listings and the calling of a federal election have created an interesting year ahead for the South Australian economy.
As a conveyancer in Adelaide and South Australia, I look upon each of these items independently as having either positive or negative effects on economic confidence and activity for this state, however I am most intrigued by how they will play off each other and what the ultimate outcome will be.
At this point, I believe we should see some positive growth in the number of homes being bought and sold in this state during the rest of 2016. Here is why.
Confidence begets activity
The news about the coastal protection boats and submarines being built in South Australia going forward is the sort of news that leads to increased confidence in an economy.
When such news is coupled with a reduction in interest rates, my experience suggests this should inject great positivity into the South Australian property market.
I would expect to see first home buyers, who have been out of the market for a while now, start returning now that conditions are more favourable.
In fact, In The Advertiser article, Interest rate cut to record lows great news for South Australian first home buyers, a Miss Harris, 27, of Myrtle Bank, is reported as saying, ‘having a lower interest rate means I can get on the property ladder.’
If the defence contracts on the horizon do instill confidence and investment into the economy, the resulting job security when coupled with historically low interest rates make for a fertile period in local real estate.
Will South Australians vote for buying and selling houses?
As with so many things in life, we don’t always get ideal conditions and so it is with the calling of a federal election.
Just when market signals were looking promising, Malcolm Turnbull called an election which, as we all know, tends to dampen economic activity, confidence and speculation for the duration of the campaign period.
But it is not all doom and gloom because Michael Yardney’s property investment report highlighted a jump in property listings in South Australia in April.
The report shows sale listings jumped 6.2 per cent to 18,053 in April in South Australia, when compared to 2015 figures.
This means investors and home buyers might be lured to greater activity than usual during an election campaign to exploit the market surplus and low cost of finance.
My reading of the situation is that while we will have some dampening of activity during the extended election campaign period, I would expect a busier than usual year in the real estate sector in South Australia as new entrants join the market and current owners consider moving or investing in stock, buoyed by increased confidence and affordable finance.
