“Dwelling prices in Adelaide have seen solid growth over the year,” says Gregg Harris, NAB retail general manager for SA.
“Prices for detached houses increased 4.9% over the year to the third quarter of 2016, while apartments also saw growth – with prices up 3.4%.”
This is attributed to the improvements to the local economy following SA’s struggles to handle the fallout of the declining mining and manufacturing industries. Growing demand can also be observed in the increased sales and auction activity.
In fact, the average clearance rate was measured by CoreLogic to be at almost 75% as of late September 2016 – the highest rate reported since 2008. This is a strong sign of Adelaide’s improving status.
Houses dominate the state’s regional market
While the general house market in South Australia has performed well, it is the southeast coast of the state that has reported the best results. “Median house price growth was strongest in Kingston, up nearly 18%, followed by Peterborough, which saw 13.3% growth,” Harris notes.
This may be due to the fact that many retirees have been finding their way to SA, particularly to areas like Victor Harbor and the Yorke Peninsula.
“Trends suggest that retirees looking to downsize have struggled to find smaller, affordable properties in the neighbourhoods close to home. Instead, they’re looking to a seachange for their retirement,” Harris explains.
“According to CoreLogic data, nearly 38% of Victor Harbor locals (more than 15,000 people) are over the age of 65 – the highest proportion of retirees in a council area anywhere in the country. Victor Harbor has always been a favourite being one of the state’s premier tourist destinations as well as having affordable house prices compared to Adelaide. It’s also a well-serviced coastal town just 80 kilometres from the CBD.”
On the flip side, while the unit market flounders in regional areas, it has been flourishing in the city, with properties near Adelaide recording excellent growth.
Harris highlights the suburb of Walkerville, just 4km from the CBD, as a standout market due to its near-20% growth in unit prices.
Investors on the city fringe
Suburbs on the city fringe are popular, particularly dwellings in the $500,000–$800,000 price range, which are generally detached houses that have been renovated and are situated on good-sized blocks.
“This price range is generally affordable for purchasers with a dual income,” Herron Todd White notes in its Month in Review for October 2016.
“It’s becoming increasingly difficult for purchasers with a single income to enter the market at this price point, without a substantial deposit to cover stamp duty in particular.”
Nonetheless, some lucky first home buyers have managed to obtain homes under $500,000 near the Adelaide CBD. Dwellings fulfilling these criteria are in high demand, unsurprisingly, as are homes close to well known but expensive areas.
However, affordability has not necessarily helped boost the regional market because the slowest markets in the state are in the outer-ring suburbs in the north, where properties are going for $200,000–$400,000 but the distance from the CBD makes them less attractive to buyers.
“The level of market activity at different price points does depend on location and generally proximity to the city and facilities,” says Herron Todd White.
“There is decreased first homebuyer activity as well as decreased investor interest given economic uncertainty with the pending closure of the Holden manufacturing plant at Elizabeth.”
Mount Gambier bucks this trend by attracting both owner-occupiers and investors who are drawn to its low property prices and stable rental yields.
SUBURB TO WATCH
Clarence Gardens: Centrally located suburb inches upwards
A few kilometres south of the Adelaide CBD, the suburb of Clarence Gardens has increased in popularity as a result of its affordability compared to other inner-city suburbs like Clarence Park. Declining supply has also helped drive up demand for homes in this area, especially houses, while units generate significant yields of over 5%.
Clarence Gardens’ attractions include the local pirate ship park and its sporting clubs. The Adelaide Showground is less than 10 minutes’ drive away, and the airport is only 8km northwest. Residents also have relatively easy access to several popular beaches, such as Glenelg and West Beaches, which can be reached by bus and train.
