Moderate market on the mend
SA’s property market doesn’t offer much in the way of exciting ups, nor does it dole out devastating lows. So, does the state’s capital city market attract negativity due to a lack of drama?
Plodding along, slowly and steadily, the SA market doesn’t throw up much in the way of surprises or excitement. Therefore many people don’t get excited about it.
Yet lack of volatility is not a bad thing, which begs the question: is the SA market, and in particular Adelaide’s market, a victim of its own moderate nature?
This question seems particularly apt when looking at the latest RP Data CoreLogic Home Value Index results.
According to this data, Adelaide recorded a solid increase in dwelling values over the September quarter, posting a 3.1% capital gain. It was one of only three capital cities to do so. Further, its year-on-year result was a healthy 5.8% growth in dwelling values.
Meanwhile, the latest Herron Todd White report notes that Adelaide’s market continues to show increasing capital growth, above-average auction clearance rates, reduced time on market, and less vendor discounting.
This is all positive commentary, and yet, all too often, Adelaide seems to be overlooked.
On the bright side
Adelaide is still Australia’s most affordable mainland state, and the market is displaying consistent, sustainable growth, says Real Estate Institute of SA president Ted Piteo. “Buyers are active and informed. How can this be bad news?”
The city’s traditionally sought-after eastern suburbs are showing a marked increase in activity, with stories of sales well above the reserve and/or in record time, says Piteo. “This is a good sign, especially as those markets have taken a bit longer to actually emerge from the downturn.”
But he would prefer to see the bottom-end markets take off more in the short-term future. Buying in those markets has a ripple effect, he says.
“When more investors and first home buyers get in there and buy up the cheap stuff, that pushes up prices and growth across the board, which is what we want to see. Having said that, we are seeing long-term investors starting to get into those markets again.”
Adelaide’s rental market is performing solidly too. According to the latest SQM Research data, the city’s vacancy rate is 1.6%. The weekly asking rent is $357 for houses and $278 for units.
Opportunities for growth
Piteo says investors might want to think more about long-term growth than current yields and opt for the capital growth that will come with well-selected properties. Such properties include those in suburbs close to Adelaide’s CBD. If thinking of an inner-city apartment, investors should choose one that is well designed and has car parking.
Piteo also recommends that investors check out the city’s southern beachside suburbs, from Christies Beach down towards Noarlunga, because of the recent completion of the dual expressway servicing the area, and the upgrade of its train lines.
“This will make a huge difference because it means that so much time has been cut off computing and travelling times. Improvements to such infrastructure are always good.”
These developments essentially mean that it is now a fabulous lifestyle area with easy proximity to the city, he says.
“There are some real opportunities there for people looking to invest.”
The problem of negativity
Given these positive market tales, why do the frequent gloomy reports about Adelaide’s market keep coming?
Piteo concedes that the SA economy is struggling and has a high unemployment rate (7%), but he thinks the media drives too much negativity about the state’s situation.
Despite the state’s close alignment with the troubled manufacturing sector, there is potential and opportunity around in all industries, he says.
“Remaining positive is crucial, though. Too much negativity and consumer confidence drops and activity drops off, and that impacts on all sectors, including property.”
Further, in Piteo’s view, the state government should be doing more to stimulate economic activity and confidence. While he acknowledges the need for the government to replenish its coffers, he says SA has the most crippling land tax regime in the country, and property owners suffer because of it.
“Tax reform and abolishing stamp duty on the purchases of homes would have a huge impact on the property sector, and on all the different small businesses and retail outlets that are involved every time a home is sold.”
SUBURB TO WATCH
Alberton: Affordability set to attract value-conscious buyers
Home to one of Adelaide’s Aussie Rules NFL teams, Alberton is an older, traditionally blue-collar part of the city. Situated about 9km from the CBD and packed with decent local amenities, its convenience is starting to attract attention.
Frank Azzollini, from LJ Hooker West Lakes, says Alberton is right beside the major transportation routes– notably Port Road – that link the CBD to Port Adelaide. “This makes for great proximity to everything, particularly when you take into account its affordability.”
The suburb’s wide streets are lined with old gum trees, and three-bedroom houses with yards are the dominant property type. Units and apartments do not make up a significant market sector.
However, Azzollini says these family-suitable properties are full of character and always sought after. “Buyers seem to really like buying – and usually living in – these
properties.”
While positioned close to the developing Port Adelaide district, Alberton itself doesn’t have any exciting new developments in its immediate future. In Azzollini’s view, its stability and security are a big part of its attraction.
Some of the better streets are considered to be Caire Street, Wellington Street, and Queen Street. All of these streets are well located and feature character homes. Conversely, streets in the area around the Alberton Oval are less popular due to the noise and traffic that come with the football season.
Azzollini says Alberton’s prices are likely to follow a steady growth path of around 3–5% per annum in the immediate future. “But a few years down the track, I could see them going ballistic.”
