Growth momentum gathers pace
The latest stats show a strengthening Adelaide market. Can this continue and where should you look?
And just like that. From a relative underperformer to the next property market superstar. While it may be too early to break open the champers, the signs are now becoming clearer and louder that South Australia’s property market is finally emerging from its long slumber.
You only have to look at the recent stats to confirm what many locals have known for a while. A quick check, and the fact that a lot of listings now have an ‘under contract’ tag on them soon after they go up online.
Marissa Schulze, an Adelaide-based mortgage broker and investor says that there is now greater confidence among buyers, as shown by the quick sales turn around for houses, and vendors are now getting more than the listed price.
“Historically, Adelaide property prices start rising after the larger capital cities have gone through their big booms,” she says. “With Melbourne and Sydney property prices sky-rocketing and their rental returns reducing, Adelaide presents a solid investment option in the current environment. I see the Adelaide property market improving and great opportunities for capital growth over the next 6-12 months.”
Schulze tips the low to mid-price bracket properties to have the best potential for recovery in particular, such as family homes under $450,000 which are now in high demand and attracting many interested purchasers.
Meanwhile, Linda Phillips, head of research at Propell sees the high-end properties in the eastern and inner southern suburbs starting to surge, with some strong price growth in recent weeks.
“Affordability remains a strong attraction to the Adelaide market,” she says. “Recent changes to planning regulations in near city LGAs are seeing some innovative higher density near city developments coming on line. The high-end market segment is demand heavy at the moment, demonstrating an underlying confidence in the state economy.”
Looking closely though, there are some markets that remain depressed, such as the northern metro suburbs.
“These suburbs are experiencing a ‘stalling’, with the imminent closure of the General Motors Holden factory at Elizabeth,” says Phillips.
“Outer northern suburb investors could experience price corrections in coming years amid the widening gap between the ‘mortgage belt’ and the elite locations. A shift in property investment characteristics, from outer suburb detached dwellings, to inner city high density apartment style accommodation, is also reducing outer suburb demand.”
South Australia’s country towns, particularly those reliant on mining such as Whyalla, are still slowing down, says Phillips.
Where to look for opportunities
Phillips says the strongest opportunities in the short term lie with larger inner suburban sites suitable for immediate higher density re-development, while longer-term opportunities exist in acquiring and holding large sites in the outer southern and hills locations. According to Phillips, these suburbs are ripe for the picking if you’re looking to ride the upturn.
An older suburb located 5km from the Adelaide CBD, Prospect is ripe for re-development and value-adding opportunities.
An undervalued suburb only 12km north east from Adelaide CBD, Athelstone offers an affordable family home location with excellent amenities.
A near city peripheral suburb with pockets that are benefiting from easing planning constraints on re-development, allowing you to build medium density quality accommodation options for a strengthening market segment.
A very popular near city suburb offering character dwellings of good appeal.
A coastal suburb near the CBD offering re-development opportunities.
An outer southern suburb that is morphing from a stigmatised housing commission suburb, to a well perceived near coastal location offering lifestyle and investment opportunities.
SUBURB TO WATCH
Prospect: Suburb with lots of it
Located 5km north of Adelaide, Prospect has been quietly gaining ground, even outpacing Adelaide’s performance during the past two years.
According to the stats from onthehouse.com.au, median house values in Prospect climbed by a total of 9.7% since 2013, compared to Adelaide metro’s 7% growth.
The suburb has been attracting a growing number of investors who are looking to redevelop or renovate, thanks to its abundant offering of character homes on large blocks of land.
This has resulted in gentrification that’s turning the suburb into a hip and desirable place for both homebuyers and renters.
The suburb’s tree-lined streets and well-maintained footpaths are also attracting families into the area. Barker Road hosts some of the most expensive properties in the area, while Old Street offers the cheapest homes.
Stay as far away as you can from Churchill Road and Regency Road as these are busy areas. Also, avoid the north side of Prospect Road if possible due to the developments in Churchill Road.
Can you afford to buy in this suburb? Find out how much you can borrow