SA Where to buy Adelaide? Or just wait?

Hi all
Starting again in the property market after separation, feels like a seller’s market in Adelaide at the moment.
I’m looking for something I can occupy short-term but possibly hang on to as an IP longer term. Budget 350-450k. Any thoughts on where in Adelaide suburbs will get best bang for buck?
Or maybe I should just wait 12 months and see what happens with the market.
Thoughts?

 

Big boom has happened so not just a buyers market but more expensive prices. 350 to 450 will be a way out if u want decent block. Are u brave enough for Elizabeth?

of course the southern suburbs might still be Ok. Close to North Adelaide has boomed tremendously. Croydon way too.

Good luck with it all, tricky times for purchasers

 

You could probably pick up something simple in that price range, about 25km's north so not quite Elizabeth, Salisbury council area. Generally ok for IP's, still a good amount of owner oc's, more working class.
You can head out Taperoo way for similar price, land locked, near beach, good blocks, working class. I'm no expert on Southern suburbs but I'm sure there would be similar pick ups, more km's out from the CBD.

 

Hi @Meeks_SA

I am with consensus here. Have a look at last 12 mo th growth in the suburb you are targeting.
Most burbs in North have grown. Decent priced properties are either with weird shaped blocks, oddly located or with large fall.
Check Salisbury, it is changing. However, you are still looking to spend 380k (if you are lucky) to 440k.

South is again well placed.

Regards
Ashish

 

Thanks all for the insights. I’m currently exploring options in the South - as someone who has always lived north east of the CBD this is new territory. There seems to be an affordable pocket around Sheidow Park, Trott park - but I’m concerned about transport to and from that area. Anyone know anything about those areas?

 

How quick can you move???

21 Yutara Avenue, Ingle Farm, SA 5098
https://www.realestate.com.au/property-house-sa-ingle+farm-136382046

N/E Adelaide, good block size, corner, development potential.

I still think there is good value in the North East. Ingle farm, valley view. Also, I don’t own property in these areas, just like to keen an eye on them as I see value.

Cheers.

 

Hi @Meeks_SA,

The most important factor is what is your goal with this investment? Are you looking for capital gains to make a profit or are you looking for a long-term hold with a cashflow positive investment that accumulates equity as well as pays for itself in its entirety?

There are always opportunities around, especially in Adelaide with so much growth happening. With a budget of $350-450k, you can easily take advantage of some really good opportunities in Adelaide (within 15kms of CBD).

Dual occupancy properties are currently gaining a lot of traction in Adelaide as well so may be a good idea to explore those options as well.

Hope it helps. Good luck!

Regards,
Sudarshan Gorle

 

Whether you wait or not depends on what you feel the market will do over the next 6-12 months. Adelaide has just experienced growth of 15% plus in most areas just this year. It's very much a seller's market and in my view buying when everyone else is, isn't usually the time to do it.

I'm not suggesting prices will drop off in the next few months (entirely possible) but even if they stay the same buying in a slightly slower market will, I believe present far more opportunities then what you are likely to find now.

 

Agreed - i've decided to sit out Adelaide for now.

 

I had dinner with some mates last week, two of whom are residential agents and another is in commercial. All are desperate for stock to list, and the lack of supply that is the price driver right now.

 

My thoughts are that this current lift in property prices has further to run yet.
Historically periods of significant real capital growth (that's CG minus the inflation rate) in Adelaide have lasted a minimum of 2 years before reaching plateau.
1973 real growth of 14% & 1974 real growth of 21%
1984 real growth of 24% & 1985 real growth 11.5%
2002 16.9%, 2003 18% and 2004 12.2%

We are only 6mths into this current growth cycle, the areas of Adelaide I've got my eyes on (West and Sth of CBD) started increasing in value only just back in Oct of 2020, my bet is 12-18mths from now prices will be significantly higher, this first wave of growth has been driven by owner occupiers, but the really powerful growth comes from speculation when the investors pile in. The investor credit growth figures are showing only just now the start of an uptick.
For a thought exercise- imagine where prices could get to if investor credit growth lifts off of this historic low and gets back to the 2015 high...

credit to Pete Wargent Daily Blog for this chart

 

This is great insight Erika but I do feel the fact that the average property price vs average wage ratio was a lot smaller back then is not something that can be overlooked.

Despite an average buyer's desire to buy a property at some point serviceability is going to become a limiting factor that will ultimately result in the stabilization of prices.

In terms of investors entering the market, I do struggle to see too many strong reasons why they would suddenly want to jump in now more than they have been over the last few months. A lot of the growth has already happened and even if another 10% was to happen in the next 12 months we are unlikely to see any significant growth for a number of years after that. On top of this, there is only one-way interest rates are going to go from here which will add further pressure to borrowing capacity and affordability. Time will tell I guess.....

 

Yes the Australian average dwelling price to household income ratio is at it's highest reading (x6). However there has been a gradual increase in womens' working house since the early 2000's, and although covid put a huge dent in the ratio of wage earners to households - I still wouldn't discount the potential for this ratio to recover and increase further still over the coming years- especially with the recent budget's improvements to child care subsidy. Note that affordability at present is a lot better than it's historical worst point in 1990 (when mortgage interest rates hit 16.5%). Chart from Alex Joiner.



Australian mortgage repayments (100% LVR) to rent ratio hit an all time low in 2020....note on the chart the last time this ratio bottomed was 1999-2001...then prices ran up considerably for the next 3 yrs...not saying this is definitely going to happen again...just pointing it out as a possibility. This chart is from Dr Cameron Murray twitter:



It is possible for interest rates to rise and house prices to also rise, happened back in 2004 -2009, this chart is from Dr Murray also:

 

I was contacted today by agent looking to list my place, with the story that the prices are so high my expectations will be met.

Also with a story that the growth has now peaked.

Putting aside the stories, i think the truth is that the listings are so low that agents will do nearly anything to create new listings. The other thing the agent said is ' we have never seen this before'.

For people on the sidelines is there a risk of settling down not happening?

 

Property listings are the lowest they have been for a decade (which is as far back as the SQM data series goes)

Southern Adelaide May 2019; 3497 total listings vs May 2021; 1998 listings, down 42%!



So, what is going to bring property listings back to typical levels...?

 

I would have thought the low number of listings is simply a result of the fact properties which are listed are selling so quickly and in some cases before they are even listed. This in my view isn't the driver of the hot market but rather its consequence.

I don't have the figures in front of me but do believe the volume of transactions in Q1 2021 is on par with the previous 5. Put simply, it's the above-average level of demand that is making the average level of supply suddenly seem low.

 

fair enough. I think the low number of listings affects agents disproportionately, so that is probably why it gets so much air time (or why the problem is described that way).

 

Historical Adelaide hasn't been a strong performer. I beleive it will stay same. Supply and Demand is Econony 101. ABS doesn't expect strong population growth in Adelaide.

Please refer to population growth prediction

Centre for Population

Also Please refer to House Price Growth in Capital Cities in Australia last 30 years.

If you want a high rental yield Adelaide is good, however I don't expect constant capital growth in Adelaide.

I believe Adelaide could have short term growth but not the best place for long term investment.

 

Thanks for the link!- very interesting (I'd not come across this before).

Only a very small increase in Adelaide population for 2020-2021 of +200 people....any yet we have a property price boom...so demand is clearly outweighting supply, and it's not a response to population inflows (or lack there of).



Agreed- Adelaide has historically just been a middle-of the-range performer for capital growth. But it sure is a nice place to live and raise a family anyway

 

I used to live in West Lakes, a beautiful coastal suburb in Adelaide. I hope Adelaide performs well as my parents have an investment property in Adelaide. However, unfortunatley capital gain and nice place to live are not always relevant. Good luck.