SA Excerpt from the 2016 November Market report

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Adelaide faces hesitation from buyers
 
Although unemployment woes have been aggravated due to industry troubles, South Australia aims to maintain demand
 
Following a positive recent showing, Adelaide’s growth rate may just have hit another stumbling block.
 
The reality of industry slowdown is hitting South Australia, with the closure of the GM Holden plant. The shutdown of this large-scale operation has also affected other industries, and Herron Todd White indicates that the steelworks and iron ore sectors in Port Augusta and Whyalla are “under intense pressure”.
 
“We expect value growth in Adelaide to moderate from current levels, but there is an expectation that values will continue to rise, albeit at a fairly slow pace,” CoreLogic head of research Cameron Kusher reports.
 
Oversupply concerns continue to plague the inner-city property market, reports Herron Todd White in its Month in Review for August 2016. “If the number of projects coming on stream continues, it will probably cause a stagnation of apartment values in the short to medium term for certain projects,” it states.
 
“Until an equilibrium between supply and demand is established, buyers need to accept the risks of investing in this market and make sure they are taking a long-term view.”
 
This concern mainly relates to low-priced homes and is generally voiced by investors. Affordable, well-located properties within 10km of the CBD continue to attract attention. Some suburbs, such as Colonel Light Gardens, also report limited supply, causing dwelling prices to rise.
 
Government efforts spur state’s recovery
While significant growth is presently a far-off prospect for the state’s property market, the possibility that interest rates will drop further rather than increase could inspire investors to enter the market. Buyers of off-the-plan apartments will also benefit from stamp duty concessions.
 
Moreover, the defence industry-related projects won by Adelaide are expected to generate many jobs and make up for the unemployment caused by the declining car manufacturing industry. Other infrastructure is slated for construction as well in the near future.
 
The completion of the Royal Adelaide Hospital should certainly give the inner-city unit market new life. Given that the hospital facilities stretch from the northeast edge of Adelaide to the northwest, more amenities are likely to spring up around the suburbs in these areas, taking advantage of this potential commercial hub.
 
Outside the metro, the forestry industry has been supplying much-needed employment to residents in the Mount Gambier area. In the process, demand for housing is expected to increase to absorb the oversupply.
 
Investors’ time may be now
“Adelaide is following the trends of the eastern state capitals and accommodating construction of high rise apartments in the inner CBD and inner suburban transport corridors,” Herron Todd White notes.
 
“The property market remains stable with no widespread volatility. Certain sectors may need to be monitored but the market does not experience exaggerated fluctuation as a rule.”
 
Diaswati Mardiasmo, national research manager at PRDnationwide, also says rental rates are stable while vacancy rates are low in the house market.
 
Bargain hunters, especially those who have previously been considering pricier cities like Sydney and Melbourne, have their pick of affordable homes in SA.
 
Greg Troughton, CEO of the Real Estate Institute of South Australia, calls SA “the most affordable mainland state” and remarks that buyers are pleasantly surprised by the value for dollar compared to other states.
 
“Even with some significant perceived handbrakes in the South Australian economy of high unemployment and the structural change occurring in the northern suburbs, Adelaide is still holding up very well,” Troughton says.
 
 
SUBURB TO WATCH
Colonel Light Gardens: Heritage suburb is a hit with buyers
 
Situated 7km south of Adelaide, the suburb of Colonel Light Gardens boasts a residential area of tree-lined streets and open spaces. It is also home to numerous parks, gardens and cycling trails.
 
This suburb has a very low vacancy rate of 0.5%, and the house market has also reported almost 10% growth over the past 12 months. This is likely the result of supply levels being low in such a prime location.
 
Colonel Light Gardens is known for its post-war bungalows. Much of its architecture has historic value, and the suburb as a whole is considered a state heritage area. Residents are served by a primary school, dining establishments, a supermarket and specialty shops.
 
Adelaide’s CBD is just over 15 minutes away by car, and buses from the suburb stop at several key roads. Commuters who need to take the train can head over to Mitcham and Torrens Park.
 

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