It’s been a number of years now that Adelaide property investors have been waiting for the approval of the $30 billion Olympic Dam expansion project. I guess they saw what the mining boom did for the WA and Queensland property markets and they were hoping for the same to happen to Adelaide.
So with the approval of this huge project imminent, a fair question to ask is – will Adelaide be the next mining hot spot.
The Adelaide property market performed well for a number of years but, like most property markets around Australia, this changed over the last year and the median price dropped just over 3% in the last 12 months according to RP Data.
Almost every time I speak to a property investor from Adelaide they explain why the Olympic Dam project, which claimed to have more than $1 trillion worth of minerals under ground, will create the next Adelaide property boom.
Well…it may. But before they get too excited I ask them to look how the Brisbane and Perth property markets are going and in fact how they’ve been performing over the last 2 to 3 years. And that’s despite multi billion dollar infrastructure spending in these states over the last few years.
While both these property markets had some spin off from their state’s resources boom in the past, there is clearly no guarantee of booming capital city property values – and particularly no guarantee of consistent long term above average growth.
If anything there is the likelihood of a more volatile property markets driven by the ebbs and flows of the mining industry.
And this is even more likely in Adelaide, with its small population on around 1.2 million people. It doesn’t have the depth of demographics or an economy based on a wide spread of industries that I look for when investing in property.
In summary: – No doubt the Olympic dam project will be good for the SA economy and in the long term for Adelaide’s property market.
Buying property in Adelaide, or in any mining town hoping for capital growth based on the resources boom is speculating.
There are better investment opportunities in our other major capital cities, especially Sydney, Brisbane and Melbourne, where a large and growing population base and a diversity of industries will underpin our property markets.
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