Investors Boost SA House Prices, Many Buy Without Viewing

Investors are increasingly purchasing properties in South Australia’s regional areas, often without viewing them in person. This trend highlights the strong demand for regional housing, particularly in light of the recent price surge.

Regional Housing Market Booms

Recent data from PropTrack reveals a remarkable 60% increase in residential property prices in regional Australia over the past five years. The median house price in these regions has reached nearly $700,000.

In South Australia, the median property price is significantly lower, at around $500,000. However, this figure indicates almost a doubling of prices in just five years.

Impact of COVID-19

Andrew Beer, Dean of the School of Management at Adelaide University, attributes this trend to shifts initiated by the COVID-19 pandemic. Many individuals left urban areas for regional living, leading to sustained demand in these markets.

Locations like Mount Gambier have become particularly attractive for both homeowners and investors. Beer notes that while some buyers are relocating to these areas, others seek rental properties as investments.

Investment Returns Drive Market

• Investors realize better rental yield in regional areas.
• For example, a $500,000 house in Mount Gambier can yield $550 per week compared to $700 for a $1 million home in Adelaide.

This shift has transformed local markets into a national investment space, with many buyers purchasing properties online without direct inspections.

Challenges for First-Time Buyers

The surge in investment activity has made it more challenging for first-time buyers in the market. Brenna McKay, a recent homebuyer in Mount Gambier, noted the difficulty in competing with investors.

Many buyers express frustration as properties are increasingly snatched up before they can make an offer. The rising demand has made it challenging for individuals, particularly first-time buyers, to secure homes.

Types of Investors

Tahlia Gabrielli from Ray White Mount Gambier identifies various types of buyers, including:

• Individual investors.
• Investors using self-managed super funds.
• Out-of-town buyers from major cities like Sydney and Melbourne.

Gabrielli explains that the practice of purchasing properties sight unseen began during the pandemic, as video walkthroughs increased in popularity.

Consequences of Rising Prices

While the influx of investment is beneficial for sellers, it has negative repercussions on housing availability. Beer emphasizes that many locals face housing insecurity, often resorting to temporary accommodations.

He urges government action to enhance infrastructure and facilitate the construction of new homes. This approach aims to address housing shortages and create a robust workforce.

In conclusion, the increasing investor activity in South Australia’s regional markets underscores significant changes in buyer behavior, driven largely by the effects of the pandemic. These trends are reshaping local communities and challenging first-time homeowners.