Adelaide continues to fly under the radar as a soft market with limited prospects. It is not crashing in the same way that Perth and Darwin have been, but buyers are starting to steer clear.
“[Adelaide’s] not had necessarily strong population growth. It hasn’t got a strong economy. Construction’s probably been slightly above underlying demand for dwellings for the last few years, so it’s not a tight market,” says Angie Zigomanis, senior residential property manager at BIS Oxford Economics.
Economically, Adelaide has had little to offer in terms of employment opportunities, with only two state infrastructure projects set to commence in the near future.
“The main one that everyone talks about will be defence – there are a couple of big naval contracts and submarine contracts,” Zigomanis says.
“[However,] we’re not 100% sure on what the impact on Australia will be. There will be extra employment, but how much of it is still open to debate.”
Thus, while the Adelaide market could experience a slight boost, it’s not expected to outperform other states any time soon.
“The future of urban development in South Australia is probably a little more uncertain at this particular point in time than it has been for a while,” says Pat Gerace, chief executive director of the Urban Development Institute of Australia SA.
Units underperform
Higher-density dwellings are in the pipeline, to the consternation of some members of the community.
“There has been an undeniable increase in density across Adelaide, predominantly led by two-for-one subdivisions for their relative ease,” Gerace states.
“What we are now seeing are more and more community groups becoming increasingly active and upset about some of the impacts that this density brings – more car parking on suburban streets, property interface issues and a focus on the quality of open space.”
According to CoreLogic’s Hedonic Home Value Index for October 2017, the difference in the performance levels of the house and unit markets in Adelaide is substantial.
“The underperformance of the unit sector likely relates to higher supply levels relative to demand, and less challenging affordability constraints which is supporting demand across the detached housing sector,” explains Tim Lawless, head of research at CoreLogic.
Simon Pressley, managing director of Propertyology, notes that housing supply is more controlled, whereas apartment stock has soared in the inner city.
“While property prices in Adelaide’s outer suburbs have been stagnant, several more affluent parts of the city have been solid,” he says.
SUBURB TO WATCH
FINDON: Inner-city suburb flourishes
About 6km west of the Adelaide CBD, the suburb of Findon is enjoying solid performance of its property market.
Houses saw 10% growth in the 12 months to November 2017, to a median value slightly under $500,000. The unit market is also experiencing gentle, consistent price increases and a reasonable yield of 4.1%.
Findon is well stocked with amenities, including a local community centre, shops on Findon Road and Grange Road, and parks. Several schools serve the suburb, namely Findon High School and the Nazareth Catholic College Primary and Early Childhood Centre. Findon Oval is the main haunt of local sports clubs, and the suburb’s cycling club gathers at Findon Cycle Speedway. The massive Adelaide Arena is located here as well.
Recreation: Findon is home to the Adelaide Arena, so sports fans flock to the suburb
Parks: There are many parks in Findon, including Matheson Reserve and part of the Basa Reserve
