Adelaide may be an appealing option for prospective investors, but more infrastructure is still required in the City of Churches
While prices are still rising in Adelaide, results actually indicate a slowing in the annual rate of gain, says Kate Forbes, national director of property strategy at Metropole Property Strategists.
However, there are still numerous reasons to be positive, she says. For one, Adelaide is the only capital city not to have seen a reduction in settled sales. Forbes is also quick to point out that there’s no such thing as ‘the’ market – SA is a combination of many different markets, and some are doing better than others.
“In a marked shift, the greatest growth has moved from the highest-valued properties towards the lower and middle of the market,” she says. Damien Lee, head of acquisitions at Caifu Property, is still cautious at the moment though.
“I think there are potentially some very good gains to be made out of Adelaide in the next five to 10 years,” he says. “However, jumping in at the present day is still a bit soon, as they’re still establishing their foundation of business.”
Looking to the future
A variety of factors will determine the future of the market in this city. Forbes points to availability of credit and the increased rate of unit construction as key denominators.
Malcolm Gunning, president of the Real Estate Institute of Australia, also believes the nature of jobs in the region has a significant role to play, both now and in the years ahead.
“What’s driven the decline in Adelaide is jobs. One of the biggest industries in Adelaide now is education,” he says.
“Adelaide University is a major income producer, and you’ve got your wine and tourist industries, but tourism hasn’t been as popular. So what we’re seeing is, after a five-year period of decline, Adelaide is now starting to stabilise. But until there is more work in Adelaide, we don’t see any major growth in prices.”
Lee is slightly more optimistic, pointing to Adelaide’s “strong” aviation and logistics industry. However, he agrees that there is still more to be done.
“They need to get a few big projects and infrastructure down there,” Lee says. “When deals come in for Adelaide, it will rocket pretty quickly.”
SUBURB TO WATCH
POORAKA: Suburbia just 12km from CBD
Apparently named after an Indigenous word for ‘turpentine tree’, which is curiously not found in SA, Pooraka is just 12km north of the Adelaide CBD and within easy reach of the Barossa Valley. It’s a family-friendly environment that offers residents an opportunity to enjoy the city without the resultant hustle and bustle.
At first glance at the stats, however, an investor in Pooraka might feel there is cause for concern. After all, houses have dropped by 0.9% in 12 months and units by 5%. But this overlooks the reasonable rental yields on offer, with houses at 4.8% and units at 5.2%. And given the overall strong growth in the suburb’s house prices over the last five years, it’s well worth keeping an eye on how things develop in the coming months.
Yield: Family-friendly suburb offers strong yields for both houses and units
Amenities: Pooraka Farm Community Centre provides a variety of services, including community courses
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