PVVAL108A Property Economics

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Contents

TOC o “1-3” h z u Introduction PAGEREF _Toc68740110 h 3Analysis of Current Property Market in Adelaide Area PAGEREF _Toc68740111 h 3Trends and Forecasts PAGEREF _Toc68740112 h 3Economic Indicators Relevant to Commercial/Residential Real Estate Property PAGEREF _Toc68740113 h 5SWOT Analysis PAGEREF _Toc68740114 h 5Conclusion PAGEREF _Toc68740115 h 6

IntroductionMy chosen property is along the Hadrian Gully Road Bradbury. The property features 2.25 hectares of vacant land sitting on a peaceful and private sanctuary. It also has a spring-fed storage dam within the property and a large shed. The property is ready for home construction, allowing one to utilize a number of potential sites according to tastes and preference. It is suitable for semi-sustainable lifestyle, hobby farming, gardening, and a combination of other alternatives. It also has a variety of flora and fauna with typical hill vegetation with trees native to the region. The property targets individuals ready to vacate the hustle and bustle of city life, yet is only a 5-minute drive from Stirling.

Analysis of Current Property Market in Adelaide AreaAdelaide real estate and property value has increased significantly in the first quarter of 2021 as noted by (Spence, 2021). The perfect storm for the real estate market is supported by an amalgamation of factors including macro and micro economic characteristics. In Adelaide, the real estate market has enjoyed support from government incentives, a notable lack of supply, and low interest rates that have fueled the demand for the local real estate and housing markets. The sales, rent, value, yields, and incentives have gone up. The rise is further credited to the easing of credit standards and the reduction of cash rates from the Reserve Bank of Australia.

Trends and ForecastsIn 2021, the Australian housing and real estate market are projected to be on a rocketing trajectory (Collins, 2021). In the first quarter, home prices have grown by a surprising 2.1% according to newly released data (Australian Bureau of Statistics, 2021). The price pressure is added by the availability of credit, low interest rates, reduced complications in the buying process, and lower supply due to the uncertainties of the COVID-19 pandemic. In the next 2 years, core players like the Commonwealth Bank project a 16% increase in the price of real estate property and the housing market. As shown in figure 1 below, Australia cities have performed exceptionally well in the real estate sector in 2021.

Source: ManageCasa.com

From the above reports, it is likely that the macroeconomic and the microeconomic incentives that have followed the COVID-19 period will continue to support the real estate market.

Economic Indicators Relevant to Commercial/Residential Real Estate PropertyOne of the most important economic indicators for the commercial/residential real estate property in the Adelaide area is economic growth and the GDP. The increase in the size of the Australian economy measured by its GDP affects the price of goods. An aggregate figure of the total production of goods and services in the economy through income, expenditure, and production expresses the GDP. It is noted that the improved GDP and economic growth of the country in January 2021 has boosted the prices of property, especially around prime zones in Adelaide.

SWOT AnalysisStrengths

The property is in a prime location

The size of the land makes it attractive to different clientele

The property is well positioned in a desirable living area near different amenities Weaknesses

The property is too large and may lock out new home owners who are spending more money in the real estate market

Young people prefer living in city suburbs, making this property undesirable due to its location

Opportunities

The economy is performing well

The real estate market is in a boom

The macroeconomic conditions are making it easier to get financing

Economic conditions allow a more diverse range of buyers to get financed Threats

City properties

Beach properties

Smaller properties with already built homes

Conclusion

The property along the Hadrian Gully Road Bradbury sitting on 2.25 hectares of vacant land is likely to fetch a good price. The current market conditions in Australia and in Adelaide mean that the real estate pricing and movement of homes is faster than previous periods. The discussion has seen that incentives from government actions, the central bank, and the RBA will push buyers to seek real estate property, making the supply lesser than the demand.

References

Australian Bureau of Statistics (ABS). (Mar 16, 2021). Residential Property Price Indexes: Eight

Capital Cities. ABS. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/residential-property-price-indexes-eight-capital-cities/latest-release

Collins, G. (Mar 03, 2021). Australia Housing Market 2021: Real Estate. ManageCasa.

Available at https://managecasa.com/articles/australia-housing-market/#:~:text=Australian%20Property%20Market%20Forecast%202021&text=Commonwealth%20Bank%20has%20forecasted%20that,and%207%25%20more%20in%202022Spence, A. (Mar 29, 2021). Real estate boom extends across Adelaide. In Daily. Available at

https://indaily.com.au/news/2021/03/29/real-estate-boom-extends-across-adelaide/

Sholkoff, A. (Semester 1, 2021). PVVAL108A: Property Economics. Bachelor of Property

Valuation.