By Herron Todd White
The Adelaide metropolitan area spans some 3300 square kilometres. This area takes in the Adelaide Plains, foothills, former regional centres and sleepy beachside suburbs. The suburb profiles vary, each characterised by different property types, location characteristics and demographics. These variations provide purchasers throughout the metro area at all stages of the buyer lifecycle the opportunity to enter the market.
The most recent census data indicated that seven percent of the metropolitan area’s population was made up of people aged 30 to 34 years which represented the highest percentage of persons within an age bracket. At this time, the average age for a first home buyer was 34 years. On face value, this data suggests that the most dominant purchaser within the Adelaide metropolitan area is first home buyers. These buyers are heavily reliant on financial institutions and the bank of mum and dad. They seek out comfort before opulence within familiar surroundings, typically within range of the family home.
Within the inner ring, those brought up in Prospect (dwelling median price $685,000) look north of Regency Road to Blair Athol (dwelling median price $440,000) which represents a price differential of $245,000 while those brought up in Millswood (dwelling median price $880,000) look west of South Road to Glandore (dwelling median price $495,000) which represents a price differential of $385,000. Representing typical first home buyer properties within Blair Athol and Glandore are 65 Lionel Avenue, Blair Athol, a circa 2008 brick veneer dwelling disposed as three-bedroom, two-bathroom on an allotment of 376 square metres and 32 Grosvenor Street, Glandore, a circa 1930 semi-detached brick dwelling disposed as two-bedrooms and one-bathroom on an allotment of 314 square metres. These properties achieved sale prices of $467,000 and $502,500 respectively.
We are also seeing first home buyers moving into the developing suburbs at the extremities of the metropolitan area. This has become ever prevalent north of the city with Munno Para West recording the lowest median age of 29 years for the metropolitan area. Located 35 kilometres north of the Adelaide CBD, Munno Para West has been extensively developed over the past decade and provides purchasers with an affordable product of a more comfortable standard relative to the surrounding suburbs. An example of the typical dwelling within Munno Para West is 7 Blossom Road which achieved a sale price of $293,000. This property provides a circa 2014 brick veneer dwelling disposed as three-bedrooms and two bathrooms. The dwelling has a double garage and a basic level of site improvements situated on an allotment of 370 square metres.
As we move through the buyer lifecycle, first home buyers progress to upgraders and investors. Both these buyer types are looking for vastly different asset types. Upgraders are seeking out properties with increased accommodation, proximity to services particularly schooling, upside in terms of ability to extend or renovate and all at a reasonable price. All of these factors come together east of the CBD in the foothills suburbs of Stonyfell, Wattle Park and Beaumont. Each of these suburbs is well serviced and had development occur through the 1970s and 1980s, with a substantial number of large brick homes being constructed. Many of these come to market in a neat and tidy original condition. Comparative affordability to the surrounding suburbs comes through the gradients of the land as the suburbs move further into the foothills. Representations of this property type come in the form of 15 Caithness Avenue, Beaumont and 3 Darrell Avenue, Wattle Park, each achieving a sale price of $880,000. Both properties provide neat and tidy original 1970s brick dwellings each with four bedrooms, multiple living areas and sloping allotments of greater than 950 square metres.
Investors are seeking out properties throughout the greater metropolitan area with no real single area designated as a hot spot. The outer ring is providing gross yields in excess of eight percent however provide limited price growth whilst the opposite is true for the inner and middle rings where gross yields soften to sub-five percent however provide stronger prospects for price growth. Investors avoid properties which require extensive capital works, tending to seek out tired properties which require a slapdash makeover to increase the achievable weekly rental. The recent sale of 55 Marshall Terrace, Brooklyn Park for $555,000 is a fair representation of typical investor stock. This is a neat and tidy original 1950s brick dwelling disposed as four bedrooms and one bathroom on a 635 square metre corner allotment. Since settlement, the property has been listed for rent asking $465 per week. If the asking rental is achieved, the property will generate a gross yield of 4.35 percent.
The buyer lifecycle is moving into its final stage with downsizers being front and centre. These buyers are cashed up and specific in what they require. We typically see these buyers looking to reduce land size for low maintenance however retain living space for the grandkids to a sleepover. The kicker for these buyers is that they don’t want to move any further than a drop punt from the family home. This can become problematic for those living in the inner ring as zoning constraints restrict high-density development reducing the availability of stock for these purchasers. Filling the market gap in the inner southern suburbs is the Cedar Woods development of the former Glenside Hospital site. With proximity to Burnside Village, Adelaide Parklands and The Arkaba shopping and health precinct, this development has been popular with downsizers moving from the surrounding low-density heritage suburbs. Further servicing this market are the Norwood Green and George and Queen developments in the inner eastern suburb of Norwood.
Disruptors to the traditional buyer lifecycle are non-Australian born purchasers entering the market. These buyers seek out comfortable surroundings gravitating towards areas which provide a cultural resemblance to their home country. The CBD apartment market has been popular with Chinese buyers, particularly apartments within the buildings surrounding Chinatown. Similarly, the suburbs surrounding the northern section of Prospect Road have been popular with Middle Eastern, African and Indian purchasers. Many of these purchasers come from cultures where the whole family lives under one roof. We have seen an increase in construction of dwellings with self-contained living spaces and established dwellings being improved with detached living spaces.
Suburban Adelaide provides market entrants at all stages of the buyer lifecycle the opportunity to enter the market. With a swathe of differing property types and market entry price point, there will be something available for everyone.
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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.