Adelaide August 2017

The month in review: Adelaide

By Herron Todd White
August 2017

The property type that appeals to investors will largely depend on location and proximity to the CBD. It has typically been detached housing that has attracted investors in suburbs outside the CBD, however increasing higher density in-fill development within many suburbs is resulting in investment in townhouse and group dwelling style accommodation. This is becoming more prevalent due to varying zoning changes in council areas across Adelaide. Whilst non-local investors are also active in these newer markets, they have typically been attracted to apartments in the CBD due to proximity to services and facilities as well as stamp duty concessions.

Price point is difficult to quantify but typically $450,000 to $600,000 for detached housing and $300,000 to $500,000 for group dwelling style housing. This will vary largely depending on location.

The Adelaide market has remained fairly stable over the past few years. Investors are generally seeking yields with a view to longer term capital gains. There are also investors seeking properties in areas undergoing in-fill development with many holding properties to develop in the medium to long term.

There has been ongoing activity in areas such as Morphett Vale, Campbelltown, Prospect and Windsor Gardens. This appears to be due to investors purchasing newly built group style dwellings. Investors seem to find these properties appealing because they are low maintenance, well serviced by local amenities and have the potential for possible taxation benefits.

The investor market has remained largely stable over the past few years.

Whilst not a bad thing for the property market in general, investors can make it difficult for first home buyers seeking to enter the market. If they are perhaps looking to purchase a detached dwelling on a larger allotment, they may find they are competing with an investor purchasing to develop in future. This can be frustrating for purchasers in that market segment.

This would result in a slowing of the property market in general for Adelaide. It would also impact on the construction and related industries employed in the residential construction area.

There are limited hidden gem suburbs in Adelaide. Whilst there have previously been suburbs that have gone under the radar, this is no longer the case. Suburbs previously not as highly regarded have increased in popularity in recent times. An area such as Flinders Park in the western suburbs is a good example of this. Situated adjacent to Linear Park and within proximity of areas such as Torrensville, Underdale and Lockleys, the market has continued to be strong in that area. Given the increased investor activity, selling agents are reporting that first home buyers are finding it difficult to compete with the investor market.

Our advice to investors is to purchase a property in a well serviced area with proximity to shopping and transport facilities. This will improve chances of attracting tenants and securing rental income in the long term.