Adelaide July 2018

The month in review: Adelaide

By Herron Todd White
July 2018

The March quarter indicated the median metropolitan sale price for South Australia to be $470,000 which is a 3% increase on the same period last year. Gains over the past 12 months have been more prevalent within the inner and middle rings whilst portions of the outer ring have remained stagnant and in some cases had negative growth. As the median house price hovers in the high $400,000s, there are plenty of options available for those looking to park their lazy half million. We have focused on detached dwellings for this piece.

The availability of detached houses in the inner ring has become scarce at this price point with purchasers having to turn to dwellings of poor condition or providing basic accommodation or reduced land size. A steady supply of dwellings remains available in the middle ring at this price point whilst the astute investor can pick up two dwellings in the outer ring for sub $500,000.

Within the inner ring, character dwellings remain the most in demand property type. With a limited supply and an abundance of purchasers only the most basic dwellings are available at this price point. The sales of 24 Birt Avenue, Hilton and 12 Third Avenue, Sefton Park achieved prices of $495,000 and $476,000 respectively. Both these properties comprise detached 1900s cottages disposed as 2-bedrooms and 1-bathroom. Both properties were in poor condition and had been advertised as renovator’s delights. Hilton is located three kilometres west of the CBD whilst Sefton Park is located 5.5 kilometres north of the CBD.

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Purchasers looking for something that doesn’t require some elbow grease at this price point are turning to 1980s and 1990s dwellings on cut blocks. The sale of 23 Third Street, Magill for $495,000 provides a good representation of what’s available at this price point. This is a circa 1992 single level dwelling of brick construction disposed as 3-bedrooms and 1-bathroom. The dwelling presents in original condition and is situated on an allotment of approximately 300 square metres. Magill is located 6.5 kilometres east of the CBD.

Purchasers wanting to get more bang for their $500,000 are looking to the middle ring. Development sites, renovated detached dwellings and properties within newer infill developments are available at this price point. South of the CBD, a development site located at 13 Vardon Street, Seacombe Gardens achieved a price of $520,000. This property comprised a cement sheet clad dwelling on an allotment of 776 square metres with a 30 metre frontage. There is currently a development application over this property to divide it into three allotments. Seacombe Gardens is located 12 kilometres south of the CBD.

The north-eastern suburbs provide some of the most affordable family homes in the middle ring. These suburbs are serviced by a number of large community hubs and have easy access to the CBD via the recently extended O-Bahn bus way and the major arterial roads of Lower North East and North East Roads. Located approximately 15 kilometres from the CBD are the recent sales of 22 Lynore Avenue, Modbury Heights and 5 Summer Hill Court, Wynn Vale which achieved prices of $530,000 and $509,000 respectively. These two properties have been internally renovated and provide substantial accommodation for expanding families. Both properties provide allotments of greater than 650 square metres with 22 Lynore Avenue, Modbury Heights having Adelaide Plain views whilst 5 Summer Hill Court, Wynn Vale has a swimming pool.

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The outer ring provides the astute investor a plethora of opportunities to park $500,000 with the ability to purchase more than one property with change left in the back pocket. The median price north of the CBD in this market segment typically falls within the $200,000 to $300,000 price range whilst south of the CBD, median prices typically start at $300,000. The outer ring provides investors the ability to consistently achieve gross rental yields of 6% to 7%. Located approximately 25 kilometres north of the CBD is 35 Salerno Court, Elizabeth East, a 1970s original 3-bedroom, 1-bathroom brick house on 620 square metres which achieved a sale price of $185,000. This property had previously been tenanted for $255 per week indicating a gross rental yield of 7%. Located 24 kilometres south of the CBD is 33 Marston Drive, Morphett Vale, a 1970s partly renovated 3-bedroom, 1-bathroom brick house on 630 square metres which achieved a sale price of $285,000. This property has the potential to achieve a weekly rental of $315 indicating a gross yield of 6%.

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The half a million dollar price point provides a number of opportunities for those looking to purchase detached dwellings in suburban Adelaide. The inner ring remains the best performing segment however with demand being high and a lack of supply, properties at this price level have become scarce. With the inner ring becoming less affordable at this price level, purchasers are casting the net wider into the middle ring. The middle ring is showing the best signs for capital growth at this price point over the next 12 months. Those purchasing in the middle ring should have confidence in the market over the short term. Suburbs to keep an eye on over the next 12 months include Clearview to the north ($440,500 median house price), Windsor Gardens to the east ($452,500 median house price), Marion to the south ($511,000 median house price) and Woodville North to the west ($385,000 median house price).

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.