Slow and steady gains as prices hit record highs
Adelaide’s property market has continued to build some momentum after seeing another increase in property prices in January.
According to the latest data from CoreLogic, dwelling values in Adelaide rose 0.2% for the month and 1.3% for the quarter. As it stands property prices in Adelaide are sitting at record high levels with a median of $485,00, as the volume of sales continues to increase.
The story of the Adelaide market continues to be one of slow and steady gains. During the most recent price falls in Sydney and Melbourne, Adelaide and South Australia were able to avoid most of the downside, with values holding steady.
The Real Estate Institute of South Australia (REISA) President, Brett Roefeldt believes that the Adelaide market is headed in the right direction as buyers are coming out after the holiday period.
“The Adelaide market is a bit like the hare and the tortoise, we’re moving forward but we’re not breaking any speed records at the moment.”
“What we have seen is that the median has increased in 2019 by 1.3%, to $485,000, which is the highest it’s ever been. But it’s still the lowest in the nation, so there is currently tremendous upside potential here with a lot of positives," said the REISA President.
On the ground, Mr. Roefeldt reveals that agents are seeing a lot of good signs already in 2020.
“Agents are saying that it’s been a good start to the year, with great numbers at their open inspections and sales happening quickly with many properties selling in the first week or two with multiple offers.”
“We still have exceptionally low stock levels and that’s fuelling good solid demand from the buyers as there is not much for them to choose from, so if they find something they want, they have to pay a premium to get it.”
Demand for affordable housing
Mr. Roefeldt reports that there are good opportunities for investors in mortgage belt areas that are currently experiencing high rental demand.
“Your outer-area, mortgage belt type suburbs, made up the top-five selling suburbs in 2019. That’s area’s like Morphett Vale, Hallett Cove, Aldinga Beach, Parafield Gardens and Paralowie.”
“The key driver there for buyers is affordability. All those areas have good infrastructure and are convenient locations. And these suburbs have affordable rents and that’s where the demand is,” said Mr. Roefeldt.
“Property managers are indicating to me that vacancy rates in these areas are extremely low on average, particularly in properties with asking-rents under $400, they will be inundated with enquiries. These areas are seeing yields of 5% and rents are rising."
Yield and growth opportunities
Director of National Property Buyers, Katherine Skinner is starting to see buyer sentiment really rise in Adelaide.
“Historically, January is a quiet month within the Adelaide Market, and 2020 was no different for the first two weeks. However, in the second half of the month, we saw stock levels increase dramatically, which after months of basement levels is extremely exciting.”
“Buyer sentiment is at an all-time high here, across all of the metropolitan areas. This is driven by the low interest rates and high-performance capabilities within our affordable housing market, while for investors there are solid returns on their investment from day one.”
Given the affordable house prices across the city, Mrs. Skinner is seeing plenty of opportunities to purchase properties with strong growth potential and also high yields.
“Performance is tracking above where expectations were placed, with 5% rental yield being the new “norm” for sub $500,000 purchase price. This market is thriving and it is important not to get caught up in displayed asking prices for the homes as they are rarely a true indication of what is going to secure the property in the current market.”
“On the flip-side, while buy-in prices are increasing, so are rents in good quality homes," she said.
"As we settle into 2020 and approach the busiest time in Adelaide - Mad March – we anticipate the Adelaide property market to continue to see high-level performance for the right property, within the right areas.”
Program Director at The University of Adelaide, Peter Koulizos is seeing sentiment returning across the entire sector.
“The Adelaide property market is showing some green shoots of late. Property prices for both houses and units have increased in the month of January.”
“Consumer sentiment is improving as evidenced by an increase in the number of sales, at the same time that property prices are increasing," said Mr. Koulizos.
“Opportunities for investors lie in the undervalued gentrifying inner western suburbs of Adelaide such as Thebarton and Underdale. However, there are also risks in these areas as parts of the inner western suburbs lie directly under the flight path.”