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BIS Shrapnel: Adelaide to see "moderate" growth in residential land

16 Sep 13

Leading business analyst and forecaster BIS Shrapnel has predicted that Adelaide is set to be part of a nationwide trend in increasing demand for residential land.

BIS Shrapnel released details of their "Outlook for Residential Land, 2013 to 2018" report, which singled out Sydney and Perth as the fastest growing residential land markets in the country.

Melbourne and Adelaide are tipped to follow in their footsteps, but are likely to enjoy more modest rises, with land demand in the South Australian capital to remain "subdued, although growing".

According to BIS Shrapnel, Adelaide and Melbourne enjoyed the strongest residential recovery following the Global Financial Crisis, but the boom in land production and the subsequent growth in land price has seen demand for new houses peter out in recent years.

Nonetheless, Adelaide is faring better than the likes of Brisbane, and Angie Zigomanis, senior manager and report series author at BIS Shrapnel, offered some real estate advice as to the reasons why.

"The weaker markets in lot production in Melbourne and Adelaide reflect activity falling from unsustainable record levels," he said.

"Conversely, the weakness in the other cities was the result of excess supply, weak underlying demand, and constrained affordability after land prices had peaked in earlier years. These issues are now starting to wash through, with the recent declines in interest rates expected to be the trigger for a pickup in demand into 2014."

BIS Shrapnel also pointed out that improved housing affordability, which was fuelled in part by historically low interest rates, will likely lead to a "moderate" increase in demand for new houses in Adelaide. Although this will ultimately depend on whether the excess of dwellings in the city's property market remains.