After a rough period, South Australia is beginning to flourish – with the help of governmental reforms
The abolition of commercial stamp duty and the extension of stamp duty concessions on off-the-plan purchases of apartments are driving property price growth in SA.
According to the Property Council of Australia, these initiatives are helping to create additional jobs, boosting the local economy.
“We are seeing a strong positive move in sentiment,” says Ken Morrison, chief executive of the Property Council of Australia.
“There is a clear correlation between this improvement in outlook in South Australia and the aggressive approach of the Weatherill Government in lowering property taxes.”
Driven by these initiatives, Adelaide is one of only three capital cities to avoid a decline in the number of property listings in recent months.
Confidence in Adelaide’s property market is also helped by the fact that it continues to be the most affordable capital in Australia. The Herron Todd White Month in Review for July 2016 notes that many properties in this city are selling for around $500,000 and under, which is far less than in its counterparts to the east.
Near-city suburbs draw interest
Suburbs near the CBD, like Norwood and Prospect, have traditionally experienced the most capital growth. Over the past 12 months, the former recorded 5% growth while the latter reported 1% growth, despite being expensive relative to the SA average.
“Detached properties on larger allotments offered for less than $500,000 within 10km of the CBD are increasing in scarcity and are recommended as serious options for potential purchasers,” suggests Herron Todd White.
Just over 15km northwest of the CBD, Largs North is an affordable alternative to suburbs like Semaphore, Largs Bay, Glenelg and Brighton. Largs North is also a neighbour of the suburb of Osborne, which is where the French firm DCNS will be building 12 submarines, hence there are many jobs available for locals. Furthermore, Largs North is near beaches and Port Adelaide, giving it recreational value as well.
In the West Lakes area, the land on which the AAMI Stadium stands has been undergoing redevelopment since July 2015. As a result, off-the-plan homes and vacant allotments are becoming popular with buyers, and this is likely to boost the property market in the west.
Parts of Modbury have been rezoned, promoting high-density development and possibly driving future growth in the area. Rental returns in this suburb are hovering at around 5–6%, and the house market in particular has been climbing steadily over the past few months, with growth of 7% in the May quarter. Even then, dwellings in this area remain affordable.
Regaining balance
While a number of positives are evident in the Adelaide property market, there remain some risks to be aware of.
The limited level of employment growth and opportunities, coupled with slow population growth over the past few years, has had an impact in some areas, such as Mount Gambier. In such locations, although rental yields are expected to be high, property value growth is unlikely to be strong in the near future.
That said, the improving performance of suburbs throughout the state demonstrates that SA is currently at a stage in the property cycle where it is trending upwards following a stint at the bottom of the market.
Indeed, Herron Todd White places the SA house market in the ‘rising market’ stage of the property cycle, and its unit market at the ‘start of recovery’ stage.
SUBURB TO WATCH
Croydon Park: Central suburb benefits from its surroundings
For the residents of Croydon Park, 8km northwest of Adelaide, the suburb’s appeal lies in its proximity to key areas like the CBD and Croydon. It provides access to the cafe precinct of Queen Street as well as the Centro Arndale Shopping Centre. Croydon Park’s accessibility will also be enhanced by the construction of the Torrens to Torrens highway.
As a result, the suburb has reported quite a bit of growth over the past 12 months as buyers look to this area for its affordability over popular neighbours West Croydon, Woodville and Croydon. According to Herron Todd White, older-style dwellings on large allotments of land typically sell for $350,000–$450,000 while newer housing goes for $450,000–$550,000.
Rental yields for both houses and units in Croydon Park are also high at 4–5%, with rents in the range of $320–$460; thus investors can get bang for their buck.
Buses run from the suburb to the city, and the railway stations in nearby West Croydon and Dudley Park facilitate easy commutes.
