Affordability drives interest in Adelaide
Adelaide’s property market is in relatively good shape, with low prices being the main driver of demand in this capital.
“South Australia is one of the few states where supply and demand has been closely aligned, which means that the buying and selling of property has been steady,” says Charles Tarbey, chairman and owner of Century 21 Australasia.
“It is the sort of marketplace that would be good to see across the rest of Australia.”
Adelaide reported 4.2% annual growth in property prices over 2016, indicating a consistent stream of demand. This level of demand has been met thus far by existing stock.
“South Australia is a marketplace that has seen a good, strong supply of property, especially in the outerlying areas due to subdivision and development,” Tarbey says.
Choice suburbs in the city include Torrens Park, Walkerville, and Mile End. These suburbs have performed strongly over the past five years, indicating their long-term growth potential.
According to the January 2017 edition of the Cordell State Market Watch, Adelaide is expected to benefit from a number of construction projects that are set to commence, including the Northern Connector Project, a motorway that will improve access to the Adelaide port as well as to Adelaide’s north and northwest industrial regions. In addition, the Adelaide Festival Plaza precinct is set for an upgrade.
Northern suburbs a bargain
Beyond the metro, affordable growing suburbs are sought after in the regional areas of SA.
“Real estate remains affordable in South Australia’s northern suburbs,” says Gregg Harris, general manager of NAB Retail.
“Nine of the state’s top 10 suburbs with the lowest median house value are in the City of Playford local government area. Six of the 10 suburbs on the list have a median value of less than $200,000, which makes it a hotspot for first property owners and investors alike.”
For instance, the suburb of Elizabeth North records a median house price that is significantly lower than the South Australia average at $182,500, according to CoreLogic.
In addition, regional suburbs have been reaching high levels of growth over recent years.
“The median values for homes in the City of Burnside area have increased by 37% over the past five years. Unit prices in Unley and Henley Beach both grew by 20.3%,” Harris says.
Buyers must act with caution
Tarbey says the Adelaide marketplace is “deeply connected to the South Australian state economy, which has struggled but is rebounding, and conditions continue to remain steady”.
State final demand is predicted to increase at a rate of over 2% in 2017, up from the average figure of 1.2% over the past six years. This could provide some momentum for the property market.
While the shutdown of vehicle manufacturers and the property slowdown are thorns in South Australia’s side, economic factors such as the state of the Australian dollar and significant public investment in defence projects are predicted to sustain the market.
“Growth will be driven by continued solid growth in household and government spending, offsetting falling business investment and a decline in dwellings investment from 2017/2018, after a temporary rise [in 2016],” says Richard Robinson, senior economist at BIS Shrapnel.
Robinson says new public investment is forecast to rise a further 25% over the next two years, which will include road upgrades, the NBN rollout, major rail works, and the $140m Flinders Medical Centre expansion. These projects are expected to lead to new employment opportunities and potentially spur migration, encouraging population growth. In turn, this will sustain demand.
SUBURB TO WATCH
Elizabeth North: Affordability and accessibility drive demand
Bordered to the west by the Gawler railway line, the suburb of Elizabeth North is situated in the northern part of Adelaide. It is around an hour away from the CBD by car.
Residents are in proximity to the Womma and Broadmeadows railway stations, though the suburb is considered a relatively long commute from the Adelaide CBD. Bus services are provided as well. Neighbouring Elizabeth is home to several schools, as well as a shopping centre. There are various parks and reserves in the area for outdoor recreation.
Elizabeth North has recorded slight but steady growth over the past three years, likely because of its affordability. The median house price is under $200,000, and investors can obtain very high returns of over 7%. The average vacancy rate has been consistent over the past two years, at 2.64%.
However, with many of the local residents impacted by rising unemployment levels due to manufacturing closures, vendors have had to offer considerable discounts to buyers. With the amount of stock on the market increasing slightly, this could pose a problem for future growth.
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