SA Adelaide is a no for me change my mind

With unemployment at the highest in the nation at 6.9% in South Australia and proposed land tax changes that are gonna strangle investors profits... I do not understand why there articles spruiking Adelaide as the next hotspot.

Please change my mind

 

I like Adelaide for the low price point, but I'm not really interested in changing your mind on it.

 

A lot of people see Adelaide as the next hotspot because it is "cheap". What they fail to understand is average wages are not as high, hence on a house price to income ratio, Adelaide is not all that cheap.

As you note, unemployment is also rapidly rising. Wasn't it from 6.0% last month - up 0.9% in a single month.

Your tenants can't pay your rent if they don't have a job!

 

Perfect, thanks Joseph.

So if you remove megacities Sydney and Melbourne, Adelaide is the most expensive property market.

Adelaide is never going to be a megacity, hence why Adelaide house prices have been flat for the last decade, and will continue to do so.

However, Brisbane has a lot going for it, and could be a megacity following on from Melbourne.

I haven't invested outside of Sydney, but if I were, Brisbane would be the choice.

I also don't believe Adelaide will fair too well during a recession. If you were conned into Adelaide being "cheap", you may want to sell your Adelaide IPs and buy in Brisbane.

 

If you remove the mega cities (in which people do invest), it's virtually the same as the other state capitals.

 

With higher unemployment and lower population growth.

 

Historically Brisbane and Adelaide have trended in somewhat similar cycles.

 

Already factored in in the graph.

 

Adelaide's decline and fall - InDaily
The article was wrote 5 years ago but is still relevant.

As for the positives cities of >1 million people rarely die so doctors, lawyers, nurses, engineers, tradesmen etc. will always be in demand. Unlike regional areas Adelaide's population is growing at 12,000+ people a year, which is a drop in the ocean compared to Melbourne and Sydney. However, Adelaide's advantage is that it is not as isolated as Perth. The comparative advantage to Brisbane are lower holding costs (significantly cheaper rates, no floods and minimal termites).

Adelaide has a two speed property market. AVOID units/apartments at all costs and focus on LAND <20km from the CBD.

 

Adelaide challenging Canberra as Australia's most consistent property market: Hotspotting's Terry Ryder

"It keeps delivering good sales activity and above-average results on house prices – and continues to be our most under-rated market.

You’d never know any of this, as real estate consumers, because of the way mainstream media reports real estate – a focus on median price data to the exclusion of all other market barometers, sweeping generalisations which often discuss Australia as a single market, an obsession with Sydney and Melbourne as the only markets of importance, an annoying tendency to zero in on negatives"

"Many of the suburbs with the highest annual growth are towards the upper end of the Adelaide market, headed by North Adelaide (up 29% to $1,075,000), Somerton Park (up 27% to $955,000), Unley (up 14% to $990,000) and Henley Beach South (up 15% to $985,000). Aldgate and Beulah Park, with median house prices in the $800,000s, have both risen 15-16% in the past 12 months."

 

A few years ago people where bagging Tasmania as it was highest unemployment and lowest population growth. Look what has happened there....

Simple ripple effect, Melb, Sydney and HObart all had good growth. Perth is struggling at the moment but bris and adelaide are due for growth

 

Nothing to see here... move on

 

Are you sure?

They aren't going to make much difference for most people.

No. You invest where suits you.

 

Sure they can! It's called Centrelink, and people all over the country get their payments via this method & still manage to pay their rent.

 

Personally, I'm bored to tears with the constant mention of the unemployment rate in SA. Despite the unemployment rate, my properties have had capital growth (some suburbs better than others, and some years better growth than others obviously) over the past 15 yrs of ownership. There will always be a good proportion of the population with steady reliable jobs, these are the people buying homes, not those lining up at Centrelink offices. If home prices were dictated by the unemployment rate alone then Hobart wouldn't have boomed over the past few years.

As to why articles are spruiking Adelaide? Probabally just regurgitating info derived from reputable sources who's primary service is to understand the local economy and the effect on property prices, to name a few:

BIS Oxford Economics recent published a forecast of 11% growth over 2019 - 2022 for Adelaide metropolitan house median to go from $495k to $550k.

QBE (providers of Lenders Mortgage Insurance) published a prediction of 12% growth for 2018-2021.

Herron Todd White (Property valuers Australia wide) have Adelaide houses in "rising market" at 9 o'clock on the property clock.

I'm not saying Adelaide residential property is the best place to put your money, there can and will be plenty of locations that'll outperform Adelaide, and remember these are just predictions, some times they don't pan out, but for people who are invested or interested in Adelaide, published predictions of 11- 12% capital growth in 3 yrs is appealing and gives confidence.

 

Canberra is so affordable due to its high median income, I presume?

 

Doesn't adelaide have a quite high cost on purchase? Is it 4% tax? I used to think that adelaide crept up at rates equal to that 4% over the longer term. Does it ever hold true that the cost of purchase impacts positively on the gain? So if i buy a house for 100 but i have to pay 104, i will want to sell it for 104 plus...... does that ever work out?

 

For those who are unsure, South Australia does indeed have the nation's highest unemployment rate as reported last month: Unemployment rate steady as economy surprises with 40,000 extra jobs

Low wages and job loss is the number one enemy of capital growth - given we already lead the nation in unemployment I wouldn't expect any house price breakout soon (despite what the Advertiser has been saying recently).

 

No need to bash SA - it has its pros and cons like other locations. Do your own research and make choices YOU can live with. If you want somewhere else @crowboy then perhaps offer thoughts and ask some other (more specific) questions about the areas you ARE researching and liking.