Consumer confidence is high as selling times shorten and vacancy rates tighten in response to positive condition
After a long period of being the ‘middle of the pack’ capital city in Australia, Adelaide is starting to come out of its shell as it rides a strong wave of positivity.
CoreLogic’s Quarterly Rental Review for March 2019 indicates that rents are increasing in the city, while rental returns were reasonably strong over the March 2019 quarter at an average of 4.42%. Its Home Value Index for April 2019 also notes that pockets of Adelaide achieved positive growth over the last 12 months.
According to CoreLogic head of research Tim Lawless, Adelaide’s affordability plays a part in the city’s improved profile.
“As dwelling prices trend lower or level out, household incomes are edging higher and mortgage rates remain around the lowest level since the 1960s. First home buyers are clearly taking advantage of the improved levels of affordability and less competition in the market,” Lawless says.
In particular, buyers seem to be capitalising on being able to nab properties near the capital at a good price.
“It’s the largest significant urban area of the state, Adelaide, that holds the majority of positivity,” says Jeremy Sheppard, head of research at Select Residential Property.
“Selling times have sped up, the auction clearance rate has risen further, vacancy rates have tightened and the percentage of stock on market has halved.”
For sellers, though, it’s not all sunshine and roses as discounts have tipped in favour of buyers.
“The level of discounting has increased, which shows buyers have grabbed back a bit more confidence from sellers,” Sheppard reports.
Confidence levels high
In light of the recent turnaround in Adelaide’s fortunes, consumer confidence has gone up, according to the NAB Residential Property Survey report for Q1 2019. The report listed SA as having the highest sentiment levels in Australia based on capital growth and rent expectations – and as the only state to record positivity.
“South Australia’s market sentiment is 47 points higher than the national average – higher expectations for capital growth and rents are a reflection of the state’s strengthening economy,” says Libby Greenwood, acting general manager of NAB SA.
In fact, Adelaide is predicted to have the strongest growth in the country, with house prices expected to be up by 0.5% in 2020. This is the highest forecast for a mainland capital city.
SUBURB TO WATCH
BROOKLYN PARK: Houses on a strong footing
Situated just northeast of the Adelaide Airport, Brooklyn Park has seen its house market hold on to a positive growth trend over the five years to March 2019.
House values increased by 25% during that period, pushing the median up to $543,762. For units, however, things did not turn out as well – over the 12 months to March 2019 prices fell by 8.9% to a median of just $259,179. However, the rental market was in a much better place, as the average weekly unit rent increased by 1.8% as of January 2019 to hit $280, while yields were a very favourable 6.2% on average.
Location: Brooklyn Park is well located just a short distance from Adelaide Airport
Yield: At an average of 6.2%, the rental yield from units is strong