Pockets of growth sustain strong demand that is balancing supply, inspiring positive growth and keeping rents steady
Adelaide is very much a middle-of-the-pack property market, as employment troubles are keeping SA from making real strides. However, with parts of the area drawing interest from buyers, the capital remains afloat.
“South Australia remains a steady marketplace characterised by supply and demand levels that are very much in tune with each other,” says Charles Tarbey, chairman and owner of Century 21 Australasia.
“Even though the state has struggled in retaining industry, property prices are fair and affordable. Growth has been relatively flat, with a 0.1% increase over the November 2017 quarter; however, I believe it is still a good state to invest in.”
Auction results have been supporting this case – Adelaide’s clearance rate increased in 2017 compared to 2016.
“As of December 2017, Sydney and Melbourne have recorded significant declines over the same time last year; however, South Australia has appeared to buck this trend,” Tarbey says.
Rental affordability improves
Suburbs to look out for include those near the Adelaide CBD, such as Prospect, Walkerville, Campbelltown and Unley. These prestige spots appeal strongly to buyers.
“Buying in Prospect and Walkerville is paying dividends for long-term property owners,” says Gregg Harris, general manager of NAB South Australia.
“These suburbs have experienced the strongest value growth over the past decade, according to the latest Core Logic data – together classified as a capital city region, they saw a 40.1% growth in residential property values for the 10 years to October 2017.”
The developments happening in Prospect are expected to sustain growth in the near future.
“There is an insatiable demand for city-fringe living. Many large, older homes are being replaced with multistorey apartment buildings,” Harris says.
“The suburb is well connected to the Adelaide CBD, with buses and a nearby train line, while it is also close to a number of shopping complexes, healthcare centres and both public and private schools.”
Across Adelaide, rental rates largely remained steady over the 2016–17 period, at a median rental rate of $340 per week for a three-bedroom house. At the same time, the proportion of income needed to pay rent decreased, boosting rental affordability.
The affordability of housing improved for buyers as well, with the proportion of income needed to settle monthly loan payments falling by 1.5% over the September 2017 quarter to 25.3%.
SUBURB TO WATCH
EVANSTON: Houses in demand in Gawler suburb
In this suburb of Gawler, a town north of Adelaide, the house market is doing well, as values maintained a positive growth trend over the five years to December 2017.
Despite the consistent increase in values, the median price of such properties remains low, at $285,553.
This comes with a high average rental yield of 4.9%, making it a good prospect for investors looking for both long- and short-term value.
On the flip side, units are seeing a steady drop in values, pushing the median price to just slightly over $130,000. However, rental returns are remarkably high, at a staggering 7.5%.
Yield: Average yields around 5-7% are delivering good returns for investors
Affordability: Landlords on a budget can purchase a unit in Evanston in the low-$100K range