SA Adelaide Western Suburbs - City to Sea

Thank you @MTR for asking so many times for me to post this.


Clearly property opportunities exist everywhere in Adelaide. However over years in the real estate industry, we have been able to gain some insights into the broader Adelaide market which I will share here.

The metropolitan Adelaide can be generally be broken up into 5 broad sectors, these being North, East, South, West and City Central.

City Central is an excellent location however this is predominately made up of apartments. A lot of examples exist of apartment being sold off the plan only to have their value eroded after only a few short years. One of the issues with city apartments is that a couple of development decisions to build high rise apartments could very quickly flood the city central area and lead to an oversupply and the accompanying stagnation of growth. This being said, property in prime city location and immediate surrounds - North Adelaide, Unley, St Peters, Mile End will always hold its value.

A Comparison of Northern and Southern areas in Adelaide

Both the Northern and Southern areas and the Eastern and Western areas tend to have some commonality between them.

To start with let’s look at the Northern and Southern Areas. Up until recently the Northern and Southern areas had more in common than they do now and this is due to a number of factors.

Because of the geographical nature of the Southern area, this area eventually finds itself land locked between the hills and the ocean. Although there are still large parcels of land that development can take place on, the volume of this land pales into insignificance relative to what is now available in the Northern Suburbs due to the "Adelaide 30 year plan". In this plan, hundreds upon hundreds of hectares have been made available in areas such as Angle Vale, Munno Para, Bucklands Park, Virginia and others.

This release was possible because unlike the southern sector which is geographically confined, the Northern area, due to its flat open expanse of available land has no such restrictions other than planning policy restrictions - which are subject to change at any time.

Putting it into perspective howerver, it took the new suburb of Mawson Lakes around 20 years to fill in with housing. The amount of land being made available in the Northern areas is now many times greater than the size of Mawson lakes.

Pricing is directly affected by supply and demand. When considering differences between long term performance between the Northern and Southern sectors this must be considered as an over supply will generally tend to hold price down.

The Southern sector now has a duplicated southern express way while the Northern areas have the Northern express way and now increased capacity of South road. The Northern sector also has the exiting of the Holdens factory and the accompanying reduction of employment in the area which will also affect pricing.

When comparing areas or sectors there is often a dynamic interrelationship between a number of factors, however weighing everything up and taking many of these factors into consideration it appears that the Southern Sector, whose median is currently similar to the Northern sector may begin to outperform its Northern counterpart in the years to come.

Comparison of the Western and Eastern Adelaide Suburbs

As mentioned previously, there is an relationship to be considered between the Eastern and Western suburbs of Adelaide. Both East and West are separated by the city and geographically land locked by some geographical feature. The Western suburbs are geographically land locked by the sea and the Eastern suburbs are geographically land locked by the Adelaide hills.

The general proximity to the city for both sectors is similar. In both sectors you are no further than 10km to the city. But interestingly they are priced differently and this is where opportunities in the Western Suburbs can be found.

Here are the differences:
The median home price is significantly higher in the East compared to the West ($100,000 to $150,000 higher in the East for a property of equivalent building area and character). This is largely due to local government policies which encourage the maintaining of character homes on large allotments in the east.

The West however is not only more accessible from a pricing point for the general population, but can also be quite favourable towards development due to local government authorities being more open towards development and land division.There are better zoning policies in the Western Suburbs.

These factors of geographical similar natures of east and west together with an easier pricing entry point in the west as well as favourable development areas makes the western sector an area of opportunity. It is also seen in areas such as the West Torrens City Council area that a nice blend of planning has been put in place where medium to high density can coexist with character areas that are being maintained for future generations.

The area along Anzac highway - Ashford to Plympton is falls under policy area 34 - medium to high density development. New policies coming in place to do more with the land available due to the geographical land locking

Most of development potential however is restricted as the boundary touches the zoning just behind it - area 24 (which only allows building to 3 stories) so unique opportunities can be found within that policy. There are a few houses which have features allowing policy 34 development.

This house: 192 Anzac Hwy Glandore SA 5037 - House for Sale #121134482 - realestate.com.au

This is unique because there is a lane behind it making it fall under the zoning that allows high density development - it cannot be cancelled out by the restricted zoning behind it due to the lane way and therefore high density applies to this property.

Note - this is also my agency's listing, remove if not appropriate but there is no other property available that I can use as an example to illustrate this.

Opportunities exist throughout the whole real estate market and in all sectors, and it is true that people who specialise within any sector of the market will more readily identify opportunities far easier than people who watch from a distance on the side lines. This being said though, the fundamental nature of various areas within the Western sector as well as large blocks commonly found in the area lends itself very nicely to investor opportunities that are very well worth taking a closer look at.

 

Comprehensive and very insightful! Thanks @Xenia

Just to add my 2 cents. The popularity of the Eastern suburbs to lots of people, including foreign nationals, is the proximity and catchment areas of some of Adelaide's top private and public schools. No surprises why the Eastern suburbs will always be in high demand.

 

Good write up in general but seem to be thrashing Northern Adelaide a bit. Southern Adelaide's median is like $100k more and 2% yield lower than Northern Adelaide. How is that comparable?

Unless you are comparing Morphett Vale to Salisbury? I'd still go Salisbury due to proximity to the city.

 

Or both, I like ability to add value and / or cash flow positive

 

yes I think I was trying to put an argument together that the Southern areas could be poised for higher growth in future due to a simple economic model of supply and demand.

Not current however as there is still a lot of building potential in the Southern areas but not as huge as the Northern areas.

Western areas offer great opportunities - very little land

 

I agree with what was said about north. There is soo much land ready to be chopped up in Munno Para alone. Not to mention all the other suburbs.

This will definatley keep supply high and prices subdued for a long time. Cash flow is definatley the key out here.

However north eastern Inglefarm, highbury etc have seen good growth last couple years which I missed out on

 

I didn't know there was a Adelaide Western, until now
Thanks Xenia

 

There is no such thing as "missed out on Johnny" - opportunities are everywhere.

 

It is Adelaide... Just buy one each from West, South and East

 

Good option for those who have cashed in a peak Sydney property

 

I dunno who you are talking about

I missed the south though. Yield is the major concern here. Without a real positives signs for CG, it is a bit worry to go in without decent yield.

 

@Xenia These high density blocks - are there any associated DCS costs?

 

I went to university in Adelaide many moons ago. I wish I had purchased in Glenelg back then. I would have thought that Glenelg (in the west) would be pricier than most of the Eastern suburbs.

 

Longtime lurker but new to the forum

I have been following Adelaide as possible new investment area for a CF+ property with a budget of $350k-$400k in the next 6-12 months.

I have read the other SA thread going and while it was great reading, after reading the pages and pages of info I am now a little confused as to which are the best current areas to look or if there is a buyers agent in that area that I could have a chat to

 

Depends what you need from the investment in terms of yield, growth, renovation potential, development potential etc.

There's something for everyone, somewhere, but you need to know what you're looking for.

I can recommend a very good BA if you end up wanting to go down that path.

 

I would think that if the strategy is buy and hold, then western suburbs might not be as good idea since there is more development coming up? @Xenia what are your views of the established villas in that area or on the eastern suburbs. I am not a developer and find it hard to understand what is a good buy in Adelaide for growth if you are not a developer.

 

Sorry should have specified!

We have a current good CG Sydney unit but with some negative cash flow so looking to even this out with a CF+. For an interstate property we would be looking at a buy and hold (min 3 years but likely 5+). We would like to move in the field of renovating/development but we are keeping it simple for our first few IPs

Feel free to PM with any recommended BA! As I said we are out of the area and time poor with a young family so we need local knowledge to narrow it down before we flew down to check them out

 

DCS?

 

That's an interesting point - after all increased prices are a function of supply and demand. If an area has a progressive development policy which will allow the rapid increase in supply, this can temper prices (with exception to development blocks to a degree, but the end values will continue to place an upper limit on sale potential).

Naturally this is why you see a strong and ever increasing values in inner North, East and South where the micro councils are heavily anti-development, keeping the lid shut on supply.

 

Developer contribution costs - Extra money council wants for high density developments as a per sqm of land area.