Perth or Adelaide for less than $500k

Im struggling between Perth or Adelaide for next IP with budget of less than $500k.

It's the standard triangle I'm looking for, positive or at least neutral cashflow, capital growth potential, and the potential for value add/manufacture equity with either a good sized land component for later development, OR an older house where a cosmetic reno/ strategic reno like extra bathroom can manufacture some equity. That pretty much means a house.

Adelaide seems to be moving quickly, and outside of parts down south like Noarlunga and surrounds, or some parts North East like Salisbury LGA, it looks like the housing market is quickly moving beyond $500k.

In terms of Perth, Rockingham area is an option, with plenty of decent houses on good sized blocks (600sqm+) available at sub $500k across various suburbs.

Then closer to the CBD, there's a heap of scattered suburbs North, West and South, too many individual suburbs to list.

What are people's thoughts of Adelaide vs Perth in 2022 and beyond?

 

I don't want to discuss suburb levels in Perth and Adelaide. You need to do lots of homework to pin point where to buy to maximize your chance.

I understand it is getting harder to find a positively geared investment grade property in Adelaide.

In terms of bigger picture, which states or cities, I humbly believe

- Next 1-2 years : Brisbane and Adelaide would be the best performing capital cities based on Demand Supply Ratio. In terms of DSR + 65 over, two capital cities have the best data. It is still interesting to see how recent QLD flood would affect current boom in QLD.

- Mid term 5 years over : I believe Perth would be the best performing city. Perth is the most suppressed capital city based on last 40 years history. It is human nature looking for best value for money. Also, Perth has one of the highest income in Australia. It is difficult to understand Perth is cheaper than Adelaide and Hobart. DSR data is picking up in Perth.

Finally, 2019 Forbes '37 Largest Australian Companies NSW has 20 companies, VIC 10, WA 4, QLD 2 and SA only 1.

 

The fundamental question is do you think Adelaide will outperform Perth going forward over a 5-10 year timeframe? Understanding that this implies Adelaide becomes permanently much more expensive than Perth, despite all the basic economic fundamentals (jobs, income, population growth, industry growth, etc) being much stronger in Perth, and Adelaide historically have lower property prices and economic performance than Perth. By investing in Adelaide you are betting on a new counter-initiative economic paradigm occurring, whereas investing in Perth is betting on previous trends and reversion to mean.

In my view Perth has more upside and less risk considering where the markets sit right now.

 

Perth

 

Well that's already happening now, with Adelaide as a whole is performing stronger than Perth atm.
I guess that's what makes my decision a question for discussion, and a difficult one!
Perth on paper has a lot going for it, but Adelaide has the actual proof in the pudding right now.




Residential Property Price Indexes: Eight Capital Cities, December 2021

 

Care to elaborate

 

Adelaide definitely did and is doing better than Perth; and likely in 2022 in my view.

But you will buy to get future growth, not recent growth so that’s what you need to keep in mind.

 

Perth.

Adelaide has exploded over the last two years (my IP there has doubled in 5 years) - too late.

 

Can only buy in very low socio economic suburbs for that in Adelaide these days.

Haven't really followed perth prices lately. Might be a better buy at that price bracket at the moment. If you manage to find more funding let me know and we can discuss Adelaide options.

 

Yep exactly price growth is a lag indicator of how a market has performed. There is very little if any correlation between, for example, strong price growth in the previous two years and strong price growth for the following two years. Getting in late after an asset has had a big price runup is how you become a bagholder. Wouldn't want to buy in at the top and be sitting around waiting 10 years for the next growth cycle to start.

 

Agree to a point, but by that logic the majority of Australia except Perth is a no buy zone because most places in the last 18 months have boomed?

 

I'm not sure if they are considered very low socio-economic areas are they?

 

Yea?

 

Yes

 

Dude, every single person responding to your thread has given you the same answer. Understand reversion to the mean.

Back in 2017 I was close to buying in Hobart but I didn't because it hadn't grown in 10 years. I was too green and didn't understand that it was actually a good thing, not bad.

Right now I'm buying in Perth at prices that people paid in 2014, i'm getting yields of over 6%, 800m from the beach, or 20km from the city. What's not to love?

 

Correct, in terms of buying for investment I don't see much point entering most Oz property markets right now (Perth the exception) because they are at or near cycle peak.

 

Fair enough, I didn't think suburbs like Morphettvale, Hackham areas, Huntfield Heights, Old Noarlunga, Noarlunga centre, and then the northern Paralowie, and surrounds were considered lower socionomic areas.

I understood places like Elizabeth and surrounds were, but didn't think the above were. But I'm not on the ground.

 

Fair enough, that's a very differing view to a lot of people buying in out Brisbane areas (Moreton Bay, Logan, Ipswich), regional areas that have recently risen around QLD and NSW, and Adelaide which has risen but people are still looking at.

I'm just trying to learn as much as I can from different opinions and data.

 

What price point are you finding these Andy?

 

Right now you could probably find something 1km from the water for mid to high $400k.

6% yield available most places, prices starting from $300k to about $400k