Adelaide’s performance has been up and down lately. The city has been known for its stability, but the recent volatility is causing investors to stay away
The Adelaide market fell out of favour in September, when median dwelling values dropped by 1.2%, according to CoreLogic RP Data.
Units suffered bigger losses as median values slid by 5.8% in September. During the year, unit values plunged by 6.9%. Only Darwin recorded bigger losses.
While the numbers aren’t encouraging, Andrew Wilson, senior economist at Domain, remains upbeat about Adelaide’s long-term prospects.
“I think Adelaide is a bright spot in the market,” he says. “Adelaide kept its head above water and has been a solid and resilient performer over the last year. Adelaide does have the worst-performing economy, but it’s still recording some price growth. They seem to shrug off issues of a weak economy. Maybe they just got used to it.”
Wilson expects prices to grow by about the same amount as last year, which was 5%. “This will be a good result given issues with the local economy,” he says. “It’s a relatively resilient and remarkable market given the economic headwind.”
Uneven growth
While Adelaide house prices have mostly held up well in recent years, the median disguises a number of different trends. Many outer suburbs, and particularly those in the north, have shown lower or negative growth, according to Linda Phillips, head of research at Propell.
“The impending closure of the car industry has had an impact in the north, which is already suffering from an oversupply of properties on the market,” she says.
“For an investor willing to take a long-term view, these suburbs may offer astute buying but with higher risk. The change in leadership within the federal government is being seen as a positive move for the state, which may lead to employment generation in other areas, submarines and shipbuilding in particular.”
Investment sweet spot
Some suburbs close to the city have shown solid demand and are still below the median price, according to Phillips.
“These include suburbs to the west and south of the city, a location which is also convenient for the airport and for access to the ocean. These are West Croydon, Flinders Park, Brooklyn Park and Glandore. Of these, West Croydon offers the lowest median price of $465,000 and has seen above-average price growth of 5.7% in the past year.
In Brooklyn Park, the median price is slightly higher at $479,000, but it has seen one of the highest price growth rates in Adelaide at 10.8% for the past year.
“Flinders Park has a median price of $503,750. A year ago, prices would not have been much different to adjacent suburbs, but it has experienced high price growth of 11.9% in the past year as buyers turned their attention to it.”
Glandore is the most expensive suburb of these four, at $525,000. But it has seen prices fall in the past year, down 7.9% with lower sales activity, and at this price it could offer value to an investor.
Prospect is the largest suburb in the selection and has the highest median price of $560,000.
Although price growth in the last year was slightly below average, at 1.4%, high sales turnover of 228 properties means there is depth to the market. Well-chosen properties in the southern half of the suburb could offer value.
Firle, located east of the city, is also a suburb to watch. It’s located in an attractive part of the city and offers easy access to the CBD.
“The median price of $533,500 makes it well priced by comparison with its neighbours, and although sales turnover has been low, prices increased 7.8% in the past year and it has the potential to rise further,” says Phillips.
SUBURB TO WATCH
O’Sullivan Beach: Australia’s most affordable beachside suburb?
Yes, you read that right. A house for less than $300,000 by the beach. It does exist. And it’s in one of Adelaide’s coastal suburbs.
Located next door to its more popular neighbour, Christies Beach, O’Sullivan Beach has many attractive features that are currently overlooked.
“Just like Christies Beach, it offers large blocks of land with old houses sitting on them. These are a great opportunity for development,” says Peter Koulizos, property professor and author. “Because it’s relatively hilly, you can get sea views from many parts of this suburb.”
Long considered a poor cousin of Christies Beach, very little development has occurred during the past 40 years. This makes the area ripe for gentrification, which is already slowly occurring.
The local parks and recreation facilities have been well maintained and upgraded in recent times, and renovations by the residents have started to transform the suburb – in particular the western side of Galloway Road where most of the regeneration is happening.
As the Christies Beach price tag keeps rising, developers are increasingly looking at O’Sullivan Beach for opportunities.
The most expensive properties are located along Sunset Court, John Terrace and Hill Street. On the other side of the scale, the cheapest houses are located on Galloway Road, Pearce Street and John Terrace.
