As affordable rents set Adelaide apart from the pack, first home buyers are moving in on the market
There's little good news for Adelaide landlords from a rental perspective, as this city has recorded the lowest weekly rent of all the capitals.
According to CoreLogic’s first 2018 Quarterly Rental Review, Adelaide’s median weekly rental rate is just $374, a stark contrast to Sydney’s $582. This follows a 2.2% rise in rental rates over the 12 months to the first quarter of 2018. CoreLogic also reports that Adelaide Central and Adelaide Hills recorded the most rental growth in this quarter, at 1.7%, making these the most expensive areas for tenants in the state.
The South Australian Outback has the second-highest rental growth, at 1.6%, and is regarded as the district with the most affordable weekly rent, at $243. It is also the region that has seen the highest annual change to rental rates (an increase of 13.9%) and the greatest rental return, at 7.1%. However, while rents and returns have jumped, property values have been sliding in the regional hubs.
First home buyers step up
With affordability increasing, first home buyers have started staking out their claims across the state. CoreLogic’s April 2018 Property Pulse report indicates that the number of first home buyer housing finance commitments rose to 443 in February this year, representing an increase of 17.8% compared to 12 months ago.
“It’s great to see young South Australians entering the market, and it’s likely due to lower median house prices,” says Gregg Harris, general manager of NAB Retail.
NAB’s Q1 2018 Residential Property survey showed that first home buyers have become the most active group of buyers in the state: about 50% of established dwellings and 45% of new properties are sold to those newly entering the market.
Meanwhile, 15% of new homes were snapped by investors, suggesting that investor interest is trickling in, perhaps due to rising expectations. That said, growth projections in the short term don’t exactly inspire huge confidence.
“The expert panel of survey respondents forecast South Australia to see 2.5% house price growth in the next two years,” Harris says. “This is more than double the current rate of growth and represents the highest expectations of experts anywhere in the country.”
Bowden in the inner north of Adelaide has been pinpointed as a suburb that should see above-average growth in the near future.
SUBURB TO WATCH
GOODWOOD: Retail business strengthens market
The suburb of Goodwood in the inner south of Adelaide boasts a bustling shopping strip on Goodwood Road, which is lined with shops and local businesses. It is also home to Goodwood Primary School and neighbours the Royal Adelaide Showgrounds.
Goodwood is just 3km from the Adelaide CBD and the popular suburb of Unley. The shopping destination of King William Road in Hyde Park is also only a few minutes away.
Goodwood’s house market has seen a mini boom in recent years, recording strong increases each year since 2015. While units have not been as strong, they make up for it with a high average yield of 5% and a 5.4% rise in the rental rate.
Amenities: Goodwood Road has many shops and Hyde Park’s King William Road is nearby
Rental returns: The rental market for Goodwood units is strong, with high and increasing returns
