With much government spending and infrastructure plans in the works, some experts are predicting that property values are set to rise in the SA market.

It was a slow quarter for Adelaide, with median values rising by a minimal 0.68% to $409,000 for houses and falling by 0.48% for units to $311,000 in July. Following a slow but steady 2009, capital growth over the 12 months to July was well below the annual average for the decade. House prices grew 6.87% in the year, while unit values rose by 4% to July, according to Residex.

However, Real Estate Institute of South Australia president Michael Brock says the Adelaide property market is certainly moving forward – particularly in the top-end and investor sectors. “Many areas of Adelaide and SA have demonstrated confidence and all have great long-term prospects,” he says.

“With interest rates stable, the state’s mining projects on track and increased certainty about our future after the Federal election, the property market in SA is expected to move forward with vigour and prove a worthwhile investment opportunity for both homebuyers and investors.”

Larry Finis of LJ Hooker in Woodville, Adelaide, agrees that the ‘rising’ Adelaide property market is humming along nicely, with no shortage of buyers. “It all comes down to price,” he says. “If a property is priced correctly, it will easily walk out the door. Anything priced between $200,000 and $500,000 is a very hot property.” Finis notes that there is an undersupply of properties on the market at present – especially in relation to the strong demand – which may mean vendors are well positioned for decent gains.

Colliers International released a white paper report in August entitled Transit Oriented Development (TOD), which looks at the SA government’s plan to establish 14 TODs across Greater Adelaide. The government’s 30-Year Plan for Greater Adelaide estimates there will be 560,000 new residents, 258,000 new homes and 282,000 new jobs in Adelaide over the next 30 years.

The state government announced a record infrastructure investment of more than $11.4bn over the four years from 2009/10. Major transport projects include the electrification of the city’s rail system, the Noarlunga to Seaford rail extension, western tram extension and O-Bahn bus extension.

The government has identified 14 TODs: Elizabeth, Salisbury, Mawson Lakes, Modbury, Port Adelaide, Woodville, West Lakes, Bowden, Adelaide city, Keswick, Glenelg, Oaklands, Bedford Park and Noarlunga. These areas are well positioned to see increasing capital growth as the government’s projects come to fruition.

Additionally, around 10,650 hectares of land will also be set aside for strategic new growth suburbs, including Angle Vale, Bolivar, Concordia and Roseworthy.

LJ Hooker’s Finis believes that Adelaide’s rental market is performing well at present, with continual strong demand for new stock. Residex has recorded rental rates of 4.08% for houses and 4.53% for units in July, with weekly rental amounts standing at $320 and $270 respectively.

Hot southern suburbs

Property educator and author Peter Koulizos and Hotspotting.com.au founder Terry Ryder have pointed to the southern coastal suburbs of Christies Beach and Seaford as the ones set to boom in the near future.

Koulizos explains that major infrastructure projects and planned re-zoning for medium-density development are two key drivers of growth in Christies Beach. “Infrastructure-wise, a lot has happened over the last 30 to 40 years, and even in the last 12 months or so the local council has upgraded Beach Road, which is the main strip in Christies Beach,” he explains.

Other improvements include the widening of the main access road of Main South and construction of the Lonsdale Highway and Southern Expressway. Future plans include the extension and electrification of the railway line, and the Southern Expressway duplication.

“The other really exciting thing for me is the re-zoning,” adds Koulizos. “The local council is actually a few steps ahead of the state government. Where the state government wants TODs all around Adelaide, the Onkaparinga Council is about to re-zone large parts of Christies Beach for medium-density development.”

With annual average growth of 14% for houses, according to RP Data in June, Koulizos says investors will benefit from capital gains rather than rental yields. Just 30 minutes from the CBD and on a prime position of the SA coast, Koulizos suggests that investors buy properties close to the beach and Beach Road, but away from Gulfview Road.

A little further south, Seaford is another suburb ticking all the investment boxes. “It’s about to undergo a massive improvement in its transport infrastructure and that’s always a big driver of growth,” explains Ryder. “They’re going to extend the rail line: it currently stops well short of Seaford, but soon it will extend all the way there, which is an affordable coastal community.”

Ryder also points to population growth as a key driver in the market. SQM Research records population boosts of 2% pa from 2001 to 2006, and predicts that this will increase to 6% pa by 2011. “Seaford is what I call a ‘stayer’,” adds Ryder. “It always seems to produce reasonable growth and is still affordable. I think it’s got good prospects.”

Another suburb recommended by Koulizos as a great investment is the inner-city area of Hindmarsh. Just 2km from the CBD, residents can simply walk through parkland into the city or hop on a tram. “The light rail extension goes alongside Hindmarsh,” explains Koulizos. “The new terminus actually stops at Hindmarsh and over the years that’s going to continue further down to Port Adelaide.”

The TOD of Bowden Village will be developed nearby; suggesting an influx of amenities may be on their way soon. Hindmarsh is also host to the Adelaide Entertainment Centre, Channel 7 studios, warehouses and the Hindmarsh Stadium.

“There aren’t that many residential streets in the suburb, but what’s there is lined by lovely character homes,” explains Koulizos. “There is great capital growth potential because of the improving infrastructure and also the opportunity to buy an older place and fix it up.”

He suggests that investors look to West Street, the northern end of Holden Street, the western end of George Street and the eastern half of Susan Street, and to avoid the Linear Park area because of the dominance of factories.