Adelaide’s housing market may not match the capital growth that Sydney and Melbourne can potentially offer but it promises stable prices that most homebuyers and property investors can take comfort in.
Property investors and first time home buyers are moving to Adelaide from cities like Sydney and Melbourne because of the stable property prices that it offers.
The prices are cheaper and the business environment is warm and welcoming.
Adelaide is certainly the next big opportunity in Australia’s property market. The South Australia government has introduced a new immigration policy that aims at attracting more immigrants and a majority of the people who choose to make South Australia their home would actually live and work in capital Adelaide.
Adelaide’s housing prices have outpaced the average annual inflation rate by 2.5 percentage points for the last five years.
South Australia is earnestly seeking more people to support the economy. It has been working to encourage skilled migrant workers and foreign students to move to the state as part of a preferential immigration plan. A rise in population can boost the property prices in the city.
In 2017, Adelaide’s housing market witnessed a slow and steady capital gain. It has consistently risen by over 3 percent between 2014 and 2016. In 2017, the growth in property prices dropped to 2.5 percent, and in 2018 to 1.3 percent. The drop in housing prices was in line with the general meltdown of prices across different property markets in the county.
Adelaide property market is highly affordable. Adelaide property investing is much easier now with hundreds of top-rated companies offering their services. You too can choose to invest in Adelaide and benefit from the advantages it offers.
Adelaide’s Robust Housing Outlook
Available data shows Adelaide’s housing prices have outpaced the annual inflation by about 2.5 percentage points per year over the past five years.
Adelaide did not record double-digit appreciation in property values like Sydney and Melbourne did during the same period, it is also not expected to witness the same rate of drop in housing prices as the two larger cities are expected to this year.
In a forecast made last November, the South Australian capital city is expected to record a 3 percent growth in housing prices in 2019, or in the worst case scenario the prices may fall by 2 percent. It is pretty clear that the Adelaide property market is going to perform in a stable and predictable way in contrast to Sydney and Melbourne, which are likely to witness a drop of 6 to 9 percent in property prices. Another forecast says if there are no major shocks anymore, the Adelaide property prices are slated to grow by 2 percent in 2019 and 2020.
The number of building approvals has increased significantly this year, especially in Adelaide CBD, which would drive construction activity and supply of ready homes.
The South Australian government has been emphasizing on the importance of increased migration to the state to overcome the massive skills shortage that its economy is suffering from.
The only constraint that Adelaide’s economy is facing, and which has a serious bearing on its housing market, is its relatively small population. It is Australia’s fifth largest city with a population of about 1.3 million.
In view of the high levels of approval and the current slowdown in the country’s property market, the house and unit prices are likely to remain moderate in Adelaide over the next few years.
Boost for Adelaide Investors
The South Australian government has taken a slew of measures to boost investments in the housing sector. In its budget for 2018-19, it introduced a new land tax relief program that is aimed to attracting investments in the state’s property markets and Adelaide being the capital is likely to corner a major of such investments. This perks up Adelaide’s attractiveness as a promising investment destination.
- As per the new policy, the threshold for tax-free land will increase from $369,000 to $450,000.
- The land tax on properties worth $1.2 to $ 5 million has been slashed to 2.9 percent from 3.7 percent.
- The new incentives are expected to provide relief to current property owners, and at the same time attract interstate investors.
Drivers of Economy
Analysts believe that improvements in the economy in recent years are certainly going to boost the housing market. Some analysts may flag concerns that the growth may not be sustainable over a long period of time. But this is where Adelaide shines over other markets. Adelaide’s property market can be described as stable; prices here do not see dramatic rise or fall andquot; they are moderate.
The shipbuilding and wine industries, which are doing well, are expected to create new employment. The median house price in Adelaide is expected to grow by a cumulative 12 percent until 2021.
The residential market stands to benefit a great deal from South Australia’s encouraging economic outlook. The state has witnessed significant improvements in private investments, retail turnover, and employment levels over the recent years.
New investments have come to its defence manufacturing sector, which already contributes significantly to South Australia’s economy. The major employment sectors are healthcare, social assistance, and manufacturing. The unemployment rate is roughly 7 percent.
Now that you know Adelaide property market a little better and the factors that are going to influence housing prices here, in the long run, you may be curious to know which are the best suburbs from investment or residential point of view.
Adelaide scores over other important property markets in term of affordability. Both property prices and cost of living are lower here compared to other important cities. It has a relaxing lifestyle, where arts, culture, food, and bars account for most of your spare time. It offers a very high degree of affordability.
After the closure of the automotive industry in the state, concerns have been expressed about the sustainability of housing demand in Adelaide. But what is noteworthy is that Adelaide has survived the property market price crash in important markets such as Sydney and Melbourne without losing significant value in the prices.
This was possible because of the low interest rates and affordable housing prices in Adelaide. The average house prices have grown by 3.8 percent per year in the past five years. That means the total capital gain has been 19% in the last five years.
Investing in Adelaide
Adelaide property market offers low-risk investment options with steady and sustained capital growth. But before you invest in Adelaide, you must familiarize yourself with the suburbs that offer a great value for money. Adelaide property investing is completely hassle-free and you will feel the difference of working in this market once you move from Sydney or Melbourne markets.
Adelaide’s CBD offers a complete range of housing options that allow you to live work, and spend your leisure in style in this premier location. Adelaide’s handsome streets have a diverse stock of residential options such as houses, apartments, and townhouses. The city is brimming with urban lifestyle options yet there are tranquil corners, a fascinating and beautiful downtown, and much more.
There are big family homes in central Adelaide, terrace houses, 3-bedroom townhouses and apartments. But most CBD residents are young professionals and students who prefer this location for the convenience, a variety of lifestyle options, and dynamic city life.
This area is replete with pubs, bars, cafes, restaurants, theatres, clubs, markets, cinemas, shops, art galleries.
A major characteristic of Adelaide city is that it has not boomed chaotically as Sydney or Melbourne. The city has slowly evolved around its fabulously planned streets and squares.
The eastern end of the city has been historically affluent and you can find beautiful two-storey terrace houses, single-fronted cottages, and stylish townhouses.
In the city’s western end, there are heritage cottages, contemporary townhouses, and most of the city’s apartment towers.
The city life promises opportunity, excitement, and convenience, yet it is a city known for its easy and relaxed lifestyle. From houses to apartments, the young city savvy professionals find a perfect home in Adelaide’s suburbs.
The downtown suburbs are encircled by parklands. However, you would never want to escape them. They offer a perfect contrast to the central districts. A drive through the downtown will reveal more of what Adelaide has to offer to its new residents.
As Adelaide’s property market is expected to remain steady in the short-term, the affordability factor of its suburbs will attract a significant portion of investments from interstate investors who are currently wary of the other big property markets in the country.
Adelaide suburbs’ performance in 2018 can be an indicator as to where you should with your investment.
- The city’s middle ring recorded the strongest gain of 3.6 percent
- The outer suburbs reported a flat growth at 3.3 percent
- The inner suburbs witnessed the biggest fall of 7.8 percent
Rather than the inner city suburbs, try to focus on middle and outer suburbs. They are more affordable and offer better capital growth prospects. Some of the hot suburbs for investments include:
- Suburbs around Marion
- Largs North
Despite adverse market sentiment, the Adelaide property market has remained steady and stable with a collective annual growth of 3 percent. The median house price stood at $493,900.
High Rental Yield
The rental market is booming and encouraging new investments.
- The rental yield is rising rapidly
- It has grown by 2.6% for houses in Adelaide
- Apartments have seen the rents rising by 3.4%
- Rents are expected to rise by 3%-5% in 2019
With many new apartment projects under implementation, Adelaide has been witnessing an oversupply of units since 2015.
Oversupply has increased vacancy rates in the range of 2.5 percent in Adelaide in 2018. This situation is expected to continue in the near future as a large number of projects are nearing completion and they will soon hit the market, which will further boost the supply situation.
With a softer preference for apartment living coupled with the oversupply situation, the capital growth in the apartment housing will be muted and restrained in Adelaide. A push from the government to attract more population in the city will drive growth in this segment in the future.
There is a distinct characteristic of the Adelaide property market. It is different from other markets such as Sydney and Melbourne, where it requires significant investments to make an entry. While capital growth is astronomical, risks are also in plenty. By contrast, Adelaide is a more affordable market, where the infrastructure, economic activities, employment scene, and growing immigrant population are comparable with any other capital cities in the country.
At a time when other property markets are witnessing a slowdown in demand, Adelaide holds out a decent investment prospect. It has consistently performed above average annual inflation and has not seen a drastic fall in prices even in the wake price crash in important property markets such as Sydney and Australia. The South Australian government has taken a host of measures to boost investments in different sectors of the economy and these measures are likely to spur migration of young and skilled professionals to the state. More population means more demand for housing.
Among the suburbs where home buyers and investors can put in their money and expect a steady and predictable capital growth, the middle suburbs have given the best capital gain, followed by outer suburbs where the capital gain was flat.
However, the inner suburbs have seen a dramatic crash in prices. So, middle suburbs remain the best choice. Having said that, you can always find good investment opportunities in any part of the city, but the middle suburbs is the safest bet. Depending on your knowledge about the Adelaide property market and your consultants’ experience, you can find great investment opportunities all around the city.
If you are looking for any professional assistance to locate your ideal investment, Fourtier would be happy to help you. Please, contact us with your queries, and our team of professional consultants will help you through the investment journey.
Contact Fourtier Buyer’s Agents today on 1300 807 144.