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SA Salisbury LGA Summary

Discussion in 'Where to Buy' started by Corey Batt, 9th Apr, 2016.

  1. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    There are a number of threads which outline the SA and Adelaide suburbs - but as some of these have years of history the data and summaries are quite disjointed, making it difficult for some people to get a grasp of suburbs and comparisons.

    Over the coming weeks @D.T. (David Traeger) and I will provide an overview of a few of the most popular areas we see investors active and our thoughts on what they have going for them and what to avoid.

    Area Overview


    The Salisbury Local Government Area has been an area of interest for investors for quite some time, but increasingly is getting seen as an area with suburbs which have potential for buy and hold, development and renovations strategies.
    The second largest council in South Australia by population, it has over 130,000 residents and growing with active urban renewal and infill development. The area has 32 suburbs within it’s boundaries, for the purpose of this overview we’ve shortlisted it to what we see as the Top 10 active suburbs being targeted by investors.

    Median prices


    [​IMG]
    Data:
    Salisbury North $237,000
    Salisbury East $304,500
    Salisbury $275,500
    Pooraka $348,500
    Paralowie $287,500
    Salisbury Downs $308,000
    Ingle Farm $317,000
    Brahma Lodge $255,500
    Para Hills $306,000
    Parafield Gardens $307,000
    *Median prices as per Residex. note: median prices in majority owner occupier areas can be misleading, as there is a disparity in owner occupied vs investor stock. Generally I find purchases funded for clients to be at or well below these figures, dependent on suburb.

    Industrial/retail vs resi sections
    As the Salisbury LGA is a well established council area which is large in terms of population and geography there is a broad spread of property types, including large industrial and retail shopping. The main shopping and transportation hub is central in Salisbury 5108, with satellite shopping hubs in every other suburb. There is also a significant sized shopping hub in Ingle Farm on the corner of Walkleys and Montague Roads.
    Small to large scale industrial is present within the LGA, located primarily in Salisbury North, Salisbury, sections of Salisbury South and Para Hills. There are localised sections of industrial sites through the various suburbs such as Brahma Lodge and Salisbury, but these are easy to avoid.

    Development Potential

    Developing in the Salisbury Council is providing the majority of new housing for the expanding population base, as there is limited greenfield and brownfield sites for suburb expansion. The council has a considerably proactive development policy which is encouraging quality development, especially in the area of subdivisions and townhouses. This is not at the expense of amenity, so development must comply to increase the quality of the area, however with the large amount of older properties in the area on larger blocks, it’s possible to build quality developments without diminishing the streetscape or living standard.
    As with the case of most of South Australia, development charges are minimal so a Torrens title division can be completed for $20-22,000, and titles PRIOR to construction – allowing any new found equity to be leveraged for construction costs.
    http://dpti.sa.gov.au/__data/assets/pdf_file/0015/174030/Salisbury_Council_Development_Plan.pdf

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    A common style of new build in the area – subdivided land

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    Townhouses in the area

    Investment in the LGA


    The Salisbury LGA has received significant investment attention from Corporate, local, State and Federal government. Some of the projects include:
    • State of the art Technology Park which contains over 85 firms including global players such as Lockheed Martin, Raytheon and SAAB
    • $350-500m expansion of the RAAF Base Edinburgh
    • $220m entertainment and shopping hub: No Cookies | The Advertiser
    • Salisbury Town Centre renewal plan Major Projects

    Corey’s Suburb Pick

    Salisbury North
    The cheapest suburb by median, whilst holding comparable rents with adjacent areas, it represents strong yields whilst tracking similar to other areas in terms of growth. Traditionally seen as the ‘worst’ part of the Salisbury area due to it’s majority % of housing trust, the government housing is largely now in private hands. Government land in the suburb including disused parks and schools are now being sold for house and land packages, rapidly changing the suburb demographic and streetscape.

    Investment strategies which might suit the area: renovations, future subdivision, cash flow buy and hold

    Corey’s “what to avoid”

    Avoid small houses. There is a wide variety of house styles in the Salisbury LGA, from ex housing trust, 70’s-90’s volume builder to modern new builds. A common misconception is to assume that all three bedroom, 1 bathrooms will value similary – when this is not the case. Valuers use the internal living square metres as one of their primary valuation metrics, meaning that properties of a similar layout (number of bedrooms, bathrooms, car parking) can be valued extremely differently based on the size of the actual structure.
    Sub 100sqm 3 bedroom homes are the smallest in the area, with the majority being 105-130sqm in size. Stick to the norm at a minimum to ensure you do not limit your future valuation and rental potential.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    City of Salisbury LGA

    Probably not a coincidence that recently acquired clients of mine have properties in this area as there appears to be plenty going on at ground level.

    [​IMG]
    Typical house in the area

    A couple of important metrics to look at are the vacancy rate of the suburb and also the rental vs owner occupied ratio. They are both signs of investor activity in an area. The vacancy rate can give you an insight on whether the area has been bought up by too many investors, ie supply becoming greater than demand. It's also an indication of the stability of rental income in the area – as a general rule less than 2% is good as that equates to 51 weeks rent per year out of 52. The total for City of Salisbury LGA is 1.21% and 1.38% for all of South Australia. The current national rate is at 2.7% (source: www.sqmresearch.com.au)

    [​IMG]

    Generally, an owner occupier will keep their property in a better condition than a tenant will so a lower ratio of renters will usually coincides with a more attractive neighbourhoods, drawing people for or against wanting to live there which in turn drives rental growth and capital growth. The state total is 27.9%.

    [​IMG]
    Source: investar.com.au

    Typical rents in the area

    I’ve graphed the typical rents in the area, separating out new from old as well as 3 and 4 bedroom houses. 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. You’ll notice in the graph I compiled (using current listings and properties rented in calendar year 2016) that 4 bedrooms attract a premium to 3’s and that is mostly because of their relative rarity, similarly as does a 2nd bathroom as these are not very common in the area.

    [​IMG]

    Dave's Suburb Pick:

    Ingle Farm

    Ranking very well on both the rental vs owner occupied ratio and on the vacancy rate metrics I can see Ingle Farm doing quite well in the future. It's only 12 km from the CBD and has a shopping centre with about 100 shops. It has good bus services to the city and to other suburban interchanges, making life easy for tenants. The area typically has good sized backyards which are in demand by tenants with families.


    Dave's "what to avoid"

    Avoid units in Salisbury LGA (unless you're buying the whole block :D) as they have far less rental demand than houses. The yield for them might seem attractive on paper, but once the strata fees are taken into account it becomes below average. A lot of the blocks are quite old, and being lower socio economic, don’t have the funding to perform necessary external repairs and upgrades.

    Stay tuned for the next area write up :)
     
    Last edited: 9th Apr, 2016
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  3. JDP1

    JDP1 Well-Known Member

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    Im dissapointed you did not recommend davoren park as your suburb pick :p:D
     
  4. Barny

    Barny Well-Known Member

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    Daveron park is the best. Better buy now before its to late.
     
  5. Nemo30

    Nemo30 Well-Known Member

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    Except Davoren Park is in a different LGA.

    Thanks for the info, very interesting.
     
    Last edited: 9th Apr, 2016
  6. Barny

    Barny Well-Known Member

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    Guys thanks for the well laid out info. Is it also possible to perhaps show some examples of development that have occurred, particular size blocks and what has been achieved. That way we can see if projects are feasible. Cheers.
     
  7. sash

    sash Well-Known Member

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    OK keep it coming boys....have one on Paralowie and another in Parafield Gardens...about time I capitalised on these two...
     
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  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    The development potential subdivisions 1 into 2 or 3 etc, what gross return on total costs are small developers seeing? Is there strong competition for development sites that stack up with 20-30% returns?

    Thanks
     
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  9. Drgonzo

    Drgonzo Well-Known Member

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    This is good info well done
     
  10. bob shovel

    bob shovel Well-Known Member

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    Great info guys!
     
  11. Mac Fields

    Mac Fields Well-Known Member

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    Great info, thanks @Corey Batt and @D.T. Any insights into some of the macro-economic drivers? Where do people work who live in the area? Average incomes?
     
  12. Coastal

    Coastal Well-Known Member

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    Thank you for the summary.
     
  13. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Hey Mac,

    I find the best source for this data is Profile ID, who tells us all of that info and more: Community profile | City of Salisbury | profile.id

    In terms of development - generally the smaller subdivisions do not have have % returns as almost everyone has the capital available to complete the simple developments, pushing their prices up. Larger developments still have potential in terms of townhouses and large land divisions, but that comes down to a huge amount of factors so there's not cookie cutter approach.

    Salisbury Council doesn't have specific block requirements, but if you run off a 9m wide frontage and aim for 300sqm torrens title end product, it's worth investigating further. Land values are rising healthily so I think we'll see more developments coming on line as profitability rises.
     
  14. Mick Butterfield

    Mick Butterfield Well-Known Member

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    Great info guys!
     
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  15. sash

    sash Well-Known Member

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    If I was to rate the top 5 suburbs in Salisbury catchment...where things are moving it would in the following order:

    1. Ingle Farm
    2. Pooraka (line ball with Ingle Farm)
    2. Parafield Gardens
    4. Para Hills
    5. Paralowie
     
  16. Adam W

    Adam W Member

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    Great job guys! As a novice I find this type of information invaluable and really appreciate you both taking the time to put this together.
     
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  17. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    You can find Part 2, Adelaide Outer Southern Suburbs Summary here.
     
  18. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    Guys, thanks for the insights.

    For those that own property or manage in the area, in terms of the tenant quality - is there a significant difference between the lower end of Salisbury LGA i.e. Sali North & Brahma Lodge vs. Parooka & Ingle Farm?
    - I note a ~$40/week disparity between the suburbs.

    Also, does the Salisbury suffixes have the negative stigma similar to Elizabeth?
     
  19. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Excluding the Salisbury North suburb, tenant quality is reasonably similar... more rent for closer to city mostly.

    Salisbury North is the housing trust area... lots have been sold off but still a fair few, so lower price/tenant quality
     
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  20. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    thanks for the feedback @DaveM.