Sellers are starting to hold out for better times, but conditions in Adelaide still strongly favour the buyer.
There’s a changing sentiment in the Adelaide market, as potential vendors are gradually seeing that buyers have the upper hand.
Raine & Horne South Australia CEO Kevin Magee says that the currently excellent buying conditions will deteriorate as sellers hold out for better times and supply starts to meet demand.
“People are starting to hold off from putting their property on the market and waiting for the stock situation to come back to a balanced level.”
Remarkably, he notes that in some instances real estate agents are even turning down listings if they think that the property won’t manage to fetch a fair price in today’s buyer’s market.
“Each area is different, but in general Adelaide’s trading out of high stock levels with 20–30% less property now coming on to the market as vendors listen to the real estate agents,” he says.
What’s fuelling this negative sentiment, adds RP Data senior researcher Cameron Kusher, is a stagnating housing market. He notes, however, that units have been holding their own.
“House values are down 0.5% over the year, but unit values are up 1.9%,” he says. “That probably comes down to affordability. People can afford to buy a unit in a location where they’d like to live, but they can’t afford a house.”
Overall, though, Adelaide is managing to outperform the capital city average in terms of capital growth, he adds, which underlines its reputation as one of the country’s least volatile property markets.
And Adelaide investors will be hoping that the state’s numerous infrastructure projects will help to fuel price growth going forwards. Certainly, a $2.6bn public transport rejuvenation (including the much anticipated Seaford rail extension), a $1.8m desalination plant, the new $1.7bn Royal Adelaide Hospital and the $812m South Road Superway project won’t do any harm.
With the city’s rail improvements in mind, Magee highlights Aldinga, Port Willunga, Sellicks Beach and McLaren Flat as areas to watch – as well as the current investor hot spots of Port Noarlunga and Christies Beach.
Tough at the top
Magee also suggests that now is an excellent time to start looking at above-median priced property in Adelaide’s prime suburbs, as this is where the best bargains are to be had.
“It’s a buyer’s market, particularly in the high-end market as there are fewer buyers looking at those properties and prices are coming down considerably,” he says. “You could now add that higher class of property to your portfolio.”
He pegs anything in the $600,000 to $700,000-plus range as the target sector. And in terms of location, he suggests Somerton Park as a prime example of a solid popular seaside spot that’s offering up major bargains and has a strong rental market to match.
“There are some really good quality properties that are certainly in demand from renters,” he says.
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