Adelaide April 2017

The month in review: Adelaide

By Herron Todd White
April 2017

Clarence Gardens and surrounding suburbs are highly desired by buyers at present. Surrounding suburbs in demand include Cumberland Park and Daw Park.

There is limited supply of detached housing in these areas, in particular in Clarence Gardens. This locality is seen as an affordable alternative to Clarence Park, Millswood and other character-style areas closer to the Adelaide CBD. The area is situated approximately eight kilometres from the city and is well serviced by local transport and shopping facilities. The area incorporates mainly detached housing on larger-style allotments with wide streets.

Demand has been further fuelled given increasing prices in suburbs close to the CBD. Areas such as Goodwood, Unley and Millswood continue to experience good demand due to their proximity to the city and typically quality, character-style property offerings. Increasing prices in these areas have forced home buyers to seek properties in neighbouring popular city fringe suburbs.

Detached housing is in demand in the $500,000 to $800,000 range. Properties at the lower end of this range typically offer original, unrenovated dwellings, whilst properties at the higher end are typically renovated or extended dwellings.

An example of the somewhat heated market in this locality is the following property situated in Cumberland Park, which was recently sold at auction. The property is a neatly presented 3-bedroom dwelling with scope for future renovation. The property was listed with a price guide of $565,000. We understand there were in excess of 20 registered bidders at auction with the property eventually selling for $720,000.

Buyers in these areas incorporate a mix of first home buyers and those upgrading from smaller-style properties in the area. Given properties generally offer larger allotments, this area is appealing to families and those seeking larger gardens and entertaining space.

Current activity appears sustainable in the short term should the lack of supply in this market continue and is likely to continue to push prices upwards.

Detached housing continues to be sought after in the Adelaide market. This is being driven by those seeking housing, and developers in areas experiencing ongoing in-fill development. In some areas, those purchasers are directly competing for properties.

This is largely dictated by location and price point. Typically, character-style areas have potential purchasers seeking classic-style dwellings, whilst older areas (with lower percentages of character-style properties) undergoing in-fill development have higher interest in newer, contemporary-style dwellings.

This is really dependent on price point and location. Given that many first home buyers are entering the property market at increasingly older ages and in some instances with young families, there can be increased interest in properties that are move-in ready.

There has been increasing discussion regarding properties in the eastern states that are being utilised as Airbnb accommodation. We will continue to monitor activity in our market to ascertain if this is an increasing market determinant in Adelaide.

The strongest activity appears to be in the $500,000 to $800,000 range within areas closer to the CBD. This has been the case within the past couple of years.

While owner-occupiers continue to drive this, in some areas there is increasing developer activity, which is also fuelling activity at the lower end of this range in particular.

It appears to be sustainable in the short term but we will continue to monitor this, particularly in light of recent lender decisions to increase interest rates for owner-occupiers and investors independent of the Reserve Bank, and reduction of loan-to-value ratios for some market participants.

 

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