Six reasons interstate buyers are investing in Adelaide
Adelaide has emerged as a magnet for interstate investors seeking high rental yields, capital growth and an affordable entry point. Katherine Skinner, Director, National Property Buyers, shares her six top reasons for investing in the Festival State's capital.
Clever investors are turning their gaze, and investment finances, to Adelaide. Once looked down upon for its slow growth, Adelaide has more recently forged a reputation as a city that withstands downturns and offers investors an array of choices when it comes to high performing investment properties.
Here’s six key reasons Adelaide has become so attractive to interstate buyers.
1. Affordability
Katherine Skinner, Director National Property Buyers
At $654,079 (CoreLogic, September), Adelaide has one of the most affordable median dwelling values of the major capital cities.
Interstate investors that have been priced out of their local markets are attracted to the ‘bang for buck’ they get buying in Adelaide.
As a local Adelaide buyer agency, many of our clients are investors, and our average purchasing price for clients this year is $455,000, significantly lower than CoreLogic’s median dwelling value.
The properties we are purchasing are on large blocks of land, have short commutes to the city or the beach, and plenty of value-add potential.
Only two state capitals, Western Australia and the Northern Territory, have a lower median dwelling value than Adelaide and the most expensive capital cities, Sydney and Canberra, are above $1 million and $900,000, respectively.
2. Low vacancy rates
If you buy an investment property in the right location and price the rent at market value, it is likely tenants will be clamouring for the property.
Australia is in the midst of a rental crisis and nowhere is that more evident than in South Australia. According to SQM Research, the October national vacancy rate across the nation’s capitals is 1.0 per cent, while in Adelaide it is just 0.4 per cent, the lowest vacancy rate of all the capital cities.
As part of our business is providing property management, we know how busy opens are and we receive multiple tenancy applications after the first open. Frustrated renters that have missed out on properties are getting desperate and offering more than the asking rent to secure a property.
3. High rental yields
It is no surprise with low buy-in prices and high rental demand that investors are benefiting from high rental yields.
Beachside Glenelg has a median house sales price of $1,672,500.
Our investor clients are achieving average rental yields of 4.9 per cent for houses, compared to the capital city average of 3.0 per cent.
High rental yields have the advantage of reducing monthly outgoings for investors and delivering positive cash flow. This in turn can make holding onto investment properties easier for small or mum and dad investors.
4. Strong capital growth
Despite the litany of headlines to the contrary, there is still solid capital growth to be achieved in the current market.
Adelaide is currently withstanding the property downturn better than any other capital city market and there are plenty of pockets still experiencing strong growth.
Of all the capital cities, Adelaide’s annual growth rate remains the highest at 16.5 per cent, while Sydney and Melbourne have retreated by 6.9 per cent and 6.8 per cent respectively. The South Australian capital’s unit market is also the strongest, with quarterly growth at 2.4 per cent.
Housing supply constraints in South Australia are also driving rents through the roof and keeping property prices relatively stable.
A common saying among investors is it is about “time in the market and not timing the market.” For anyone looking to invest in the Adelaide market over the long term, there are plenty of growth opportunities.
5. Properties for every budget
Adelaide and its surrounding suburbs offer genuine opportunities for buyers in most budget ranges.
For an investor with a smaller budget, say $450,000 to $700,000, suburbs such as Ingle Farm, Modbury Heights or Paralowie, which are all north of Adelaide, offer value.
For medium budgets, $700,000 To $1,000,000 look west of Adelaide to suburbs like Edwardstown, Birkenhead, and Flinders Park.
Inner-city suburbs, including Prospect, Norwood and Toorak Gardens, are always popular for those seeking properties with larger budgets, however, with a budget of this size it may be worth considering investing in two cheaper properties with a higher rental yield.
This just scrapes the surface of value propositions in Adelaide, which also extends to the hip and sunny beachside suburbs or the beautiful leafy green suburbs in The Hills areas.
Suburbs and houses for every budget
| Suburb | Distance from City | Median House Price | Median Asking Rent |
|---|---|---|---|
| Paralowie | 19km | $479,824 | $430 |
| Ingle Farm | 12km | $569,402 | $445 |
| Modbury Heights | 15km | $612,934 | $467 |
| Birkenhead | 14km | $655,295 | $470 |
| Edwardstown | 6km | $724,171 | $475 |
| Flinders Park | 6km | $805,218 | $490 |
| Prospect | 4.5km | $1,090,719 | $510 |
| Norwood | 3.25km | $1,326,884 | $600 |
| Toorak Gardens | 4km | $2,058,874 | $700 |
Source: Australian Property Investor Magazine suburb research tool
6. Unbeatable lifestyle
The Adelaide Hills and Barossa Valley wineries are less than an hour away from the CBD.
Adelaide’s reputation as a lifestyle destination is growing rapidly.
In 2021, Adelaide was named the third most liveable city in the world in the Global Liveability Index. The survey rates cities across five categories: stability, healthcare, culture and environment, education and infrastructure, with Adelaide the highest-ranking Australian city.
It is the wine capital of Australia, and one of the 11 great wine capitals of the world, alongside Bordeaux in France, Napa Valley in the US, and Bilbao Rioja in Spain.
Known variously as the city of churches and the festival state, whether people want to live near the sea, the hills or the city, there are lifestyle options for everyone.
