SA Outer Southern Suburbs Adelaide Summary

Just as the Salisbury LGA Summary, D.T. and I have decided to round off the outer Southern Suburbs with our top 10 picks for most investor activity. There are a huge swath of other suburbs in the area not mentioned - which we will cover in a later review.

Area Overview

Currently a region with significant growing investor interest, the outer Southern suburbs offer below metro median prices, close access to beachside property and multiple infrastructure options for direct access to the CBD. The suburbs chosen are largely within the Onkapargina Council area – the largest council in South Australia by population size. The exception is Hallett Cove, which sits with the Marion Council which is directly north.

Median Prices



Christies Beach $349,000
Christie Downs $263,000
Hackham $257,000
Hackham West $258,000
Morphett Vale $293,500
Huntfield Heights $261,000
Seaford $339,500
Seaford Meadows $371,000
Noarlunga Downs $291,500
Hallett Cove $422,000

Development Potential

The Onkaparinga and Marion councils both are embracing development to assist in their expanding population base. For the most post there is subdivision potential in the older 70’s areas with blocks >600sqm, however there is specific zoning allowing medium zoning – with block sizes averaging 150-250sqm and up to three storeys. You can read more about Onkaparinga’s medium density policy under review:

City of Onkaparinga :: Medium Density Housing Project

Demographics



As a population area, Adelaide greater metropolitain area has an average age of 38.8 years, with the vast majority of the suburbs picked sticking to this figure – with exception to Seaford Meadows in which deviates from the median significantly. This can be attributed by the first home buyer and young renter preference for new builds, due to first home owner grant market distortions and a preference for lifestyle properties in the rental market.

Median incomes in the areas described largely are below the metro average (~$1,150), with Hallett Cove outperforming – which follows trend with the area being at a significantly higher median.


Corey’s Suburb Pick

Christie Downs

With close access to amenities such as Colonades shopping centre, TAFE SA, local hospital, express trains to the CBD and only a short drive to the beachfront – I see Christie Downs as a stand out considering the affordable median price for the area and Adelaide in general.

It does current have a higher than average rental population in the area, however as the surrounding areas such as Christies Beach gentrify and costs increase, there’s a strong argument that this will cause an owner occupier flow on into the Christie Downs surrounding area.

Yields are neutral for properties in the area, so Christie Downs makes for a balanced play in terms of rental return vs capital growth.

Investment strategies which may suit the area: renovations, development, long term buy and hold for a balanced capital growth/yield focus

Corey’s “what to avoid”

Avoid buying into higher vacancy, cookie cutter subdivisions – particularly townhouses as you see in Seaford Meadows. There is a large supply component to any of these projects, so any demand is able to be met easily – keeping prices tempered indefinitely. Vacancy rates in these areas are significantly higher and the likelihood of a transition in area is hampered by any price increases causing a falloff in rental demand when the primary consideration is currently price.

I’d make note however that it’s important to note that large greenfield development acts differently to infill development within established suburbs – as the latter does not have the same supply issues, and can be an actor in the change of demographics and desirability of an area.


High density greenfield developments - Seaford Meadows

 

Outer Southern Suburbs

This has been quite a popular spot for investors, particularly interstate ones as the area allows for good value investing. The area has a low entry point, offers good yield as well as opportunities to renovate or develop.


A typical house I did an interstate inspection on in Christies Beach which might become townhouses one day


As explained last week in SA - Salisbury LGA Summary, vacancy rate of suburbs and the rental vs owner occupied ratios are important metrics to look at so I’ve sought out the statistics and provided graphs again.



Aside from the obvious outlier above, the vacancy rates are quite healthy in this region are quite healthy and we’ve typically been able to rent houses quite quickly.



The rental population in this area is quite high in this area upon first glance – some might even say to alarming levels. However you have to learn how the numbers interrelate – if it were an issue, it would push vacancy rates up but they have maintained steady despite this.

The infrastructure in the area supports this. There is a satellite CBD at Noarlunga with one of the state’s biggest shopping centres, cinemas, tafe, hospital, and everything you’d need. There’s an express train (45 mins) to Adelaide CBD or a short drive to Lonsdale for the blue collar working folk.

Typical rents in the area

I’ve graphed the typical rents for houses in the area, separating out new from old as there is quite a bit of redevelopment in the area. Note that there’s going to be some variance on rents, depending on the style and condition of the house and what features it has. Like anywhere: allowing pets, having a secure spot for the car, providing heating and cooling and you’re golden.




Dave’s Suburb Pick:

Christies Beach

The gentrification going on in this area is visible on both a residential and commercial level. Old houses are being torn down and replaced with newer ones, or in some cases new multiples. This is increasing the quality of demographic in the area.

At the same time, the number of tattoo parlours and op shops that used to line the Beach Rd precinct are now dwindling and we’re seeing in a rise in wine bars, yoga studios and cafes.

Dave’s “what to avoid”

Small blocks like those under 500 sqm as this is a young family area.

The biggest inquiry source I get when leasing properties in the area is from families with pets and children and so your best bet is to cater for them by having usable, fully fenced backyards.

Families with pets or chidren can potentially provide you with a higher rent return or more stable tenants

 

Every time I look up Adelaide prices in these areas, it reminds me that Melbourne prices are way overvalued. If I had family in Adelaide, I'd move there straight away.

Thanks for the info guys.

 

Thanks for the summary Corey and DT, very interesting.

 

Thanks for the info. Im surprised by the difference in oo/renters between hackham and hackham west.

 

Good works guys, always good to have insight from people knowing the area well.

 

Nice one guys. I really enjoy reading your analysis of Adelaide suburbs. Just wondering though with average resident age graph, Christies Beach showed higher average age than Overall Adelaide. Does it mean Christies Beach got a lot of retirees living in the suburb ?

 

Christies etc is the motorised scooter capital of Adelaide

 

Age spread in report attached

 

With everything getting pretty tighter with finance, SA certainly looks appealing

 

Although many here have already started, I'd say after SEQ, Adelaide will really be the place to go for investors. Some great opportunities and med/long term potentials.

 

cheers guys..big fan of the south

but yes do keep in mind that medium density policy is under review....has been for a while, its taking a lot longer than their initial indicated timeframes...but if your buying with development in mind oneday, worth looking at the proposed changes (keeping it mind they may not get up or things could change anyhow by the time you want to dev )

this is the pic i posted in the other thread comparing current and proposed....

 

Another great post guys - this is why i'm telling all my friends to get onto PropertyChat!

 

Agree with you York and for me personally, I need to start finding ways to increase my cashflow and hitting the max serviceability now. Disappointing but had a good run and guess I have to let time do the work until there are changes in the industry.

 

Bought into the south a year ago, will be interested to see where this thread goes. Not much results yet but cheap as chips and cashflow positive. Costs nothing to hold.

The economy is my biggest worry there though.

 

Hi dan, can you go into a little more detail as to what area/size of house, price and rent return.
Concerns on the economy?
Always great to hear from people that have invested on the area. Cheers

 

As long as there is demand on the property from owner occupiers, which there is in some parts of the southern areas, it should at least maintain the price or drive it upwards even in a down market.

Investment properties get dumped quickly in bad ecomomies so if there is no owner occupier appeal on the property it will be more prone to market forces if it's relying on another investor to come and buy it.

 

How are Onkaparinga Council for rates? Cheap, expensive, average?

 

Hi Barny

There was a duplex for $320k, which rents $250 per side - Huntfield Heights.
Plus 2 older houses $230k and $240k, they are renting on 270 or 280 I think.

The yield on the houses not as good as the duplex, but there's more land and one of them's medium density.

The strategy early 2015 was really to try and hold property in multiple states up to the land tax threshold.
The goal being to pay minimal to no land tax, have maximal cashflow, and not have investments affect cashflow or lifestyle at all really.
Then holding very very long term and let compounding work.

I did not anticipate APRA changes, which takes a big hammer and whacks anyone who holds alot of debt and stops them from buying more. In hindsight, I could have bought more in Brisbane instead of Adelaide, but hedged my bets and bought across both. Worked out ok with gains in Brissy, just not perfect with Adelaide flat. Maybe I'm greedy and impatient

As long as nothing else bad happens (besides APRA), I'll put them in the bottom drawer and pull them out again in 10-15 years to see what's happened. I can't see anything at all I want to buy in the meantime anyway, so will sit back and enjoy the next year or two and let time work it's magic once again like it's done before.

 

What's your take on the local Adelaide economy?
I heard a bit of bad news, and that hurts owner occupiers too.

They do seem to be building new though, or is that the developers??

I can see the Median has gone up a little, but mainly due to rebuilds and newer properties on the market.
My dodgy old ones will still be worth the same..
Maybe if the median goes up a bit further we can use the good old automated valuation system to get a nice 100% equity release