Adelaide basks in positivity
Following its gradual improvement in 2016, Adelaide looks set to maintain the positive growth of its housing market into the future. Gregg Harris, general manager of NAB Retail, credits this to South Australia’s burgeoning economy.
“High-performing hospitality and education sectors, as well as government announcements aimed at stimulating jobs and economic growth, have been influential in the house price increase,” he explains.
Nonetheless, the growth rate is expected to be slower than it was over 2016 because of unemployment rates that remain stubbornly high, and a weak commercial scene.
“Employment security, along with price levels, is one of the biggest constraints on South Australian buyer activity,” Harris notes.
Rental yields in the state are expected to drop as well, although they will remain higher than the average returns in Sydney and Melbourne.
A survey conducted by NAB Economics on industry experts’ thoughts regarding the local property market showed the opinions on South Australia improved significantly in the final quarter of 2016.
“While the survey results are not indicative of strong price gains going forwards for the local residential property sector, they also don’t suggest any declines,” Harris states.
The Property Council of Australia’s chief executive, Ken Morrison, also confirms that confidence in the state is increasing. Moreover, as per CoreLogic data, Adelaide looks set to maintain the previous year’s moderate growth trend.
Infrastructure adds an attractive air to well-located suburbs, with projects like the Torrens to Torrens Road Project and the work on the O-Bahn tunnel helping the local economy by providing jobs and improving infrastructures.
The Darlington Upgrade Project will also improve access to Adelaide via the Southern Expressway.
In the Month in Review report for February 2017, Herron Todd White highlights Christies Beach and Seaford as affordable options for buyers. These suburbs are near Port Noarlunga, and are now more accessible due to the electrification of the Seaford railway line.
“There are increasingly improved facilities in these areas, due to the increasing development – both infill and in the Seaford Meadows South development,” the report indicates.
With supply levels staying low, suburbs in prime locations maintain an air of desirability, such as those within 10km of the city, at the fringe of the metro, and near the beach. Recent zoning changes in Campbelltown and Prospect precipitate a steady flow of developer activity as well.
Buyers may also be enticed by the fact that Adelaide is the most affordable capital in the mainland. In the unit market, however, the same fears of oversupply that plague other capitals may also apply to Adelaide, which reports high levels of unit construction.
“Given the relatively stagnant values in this market segment, this type of property should be treated with caution,” Herron Todd White states.
Interest rate decisions may hurt
The state’s standing in 2017 may depend on interest rate increases, especially among first homebuyers.
“Recent media reports have discussed the increasing levels of consumer debt and the high levels of investor activity versus diminishing activity in [this] segment,” Herron Todd White notes. “Future interest rate decisions will further influence these levels of activity.”
With national cash rates falling since 2011, an increase is definitely in order, with some banks raising interest regardless of the RBA’s action.
In addition, the impending closure of the Holden manufacturing plant is expected to affect the value of suburbs in the north.
It is important that Adelaide stays inexpensive, since housing affordability is a concern shared by many Aussies, particularly first homebuyers. Many residents may have to be “renters for life,” as Taj Singh, co-founder of First Home Buyers Australia, puts it.
“We might even see the youth starting to leave the cities to go to regional areas,” he adds.
SUBURB TO WATCH
Edwardstown: Adelaide’s growth spills over to neighbour
Located in the city of Marion and just 6km southwest of Adelaide CBD, the suburb of Edwardstown is climbing in value.
Median house prices here are just shy of $450,000, whereas the median unit value has approached $300,000, an increase of 4.4%. This growth can be attributed to Edwardstown’s location and affordability.
The suburb houses the Castle Plaza Shopping Centre, providing residents with the largest Target store in South Australia, a Coles and a Foodland, plus around 70 specialist shops. There is also a medical centre and the Edwardstown Oval. Edwardstown is also surrounded by suburbs like Clovelly Park and Plympton which have several schools and reserves.
By bus, the Adelaide CBD is roughly 20 minutes from Edwardstown. Commuters can also take the train from Edwardstown railway station, which serves the Seaford and Tonsley lines.
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