Which Adelaide suburbs will deliver property investor gains in 2023?

Adelaide's real estate market has exceeded all the forecasts for 2022 but in a changing market, Shayne Holmes, Managing Director of Property Investment Coaching, identifies the suburbs investors should be looking at in 2023.

Shayne Holmes, Managing Director of Property Investment Coaching, against backdrop of Adelaide aerial view.
Shayne Holmes, Managing Director of Property Investment Coaching, identifies the Adelaide suburbs investors should be looking at in the year ahead. (Image source: Shutterstock.com)

The past year has been a story of two housing markets across Australia – while Sydney and Melbourne saw large price falls, Adelaide and Brisbane experienced large gains.

The latest data from CoreLogic makes this clear and shows that prices jumped 19 per cent over the past year in Adelaide, giving an average total return (inclusive of rental yield) of 23 per cent.

What explains this divergence between locations that experience the same interest rates and similar demographic trends? 

Annual House Price Growth Sep 2021-2022

The factors propelling Adelaide property prices

Adelaide’s median price is lower than prices in most of Australia’s capital cities.

It’s also much lower as a multiple of the average income, reflecting better affordability.

As a result, the typical mortgage size in Adelaide is smaller. Smaller mortgages also mean that the average borrower in Adelaide is less affected by changes in interest rates, which explains why the recent RBA rate hikes haven’t caused the large price declines seen in Sydney and Melbourne.

Another factor pushing property prices high in Adelaide is migration.

For the first time since 2002, net interstate migration to South Australia has moved into positive territory.

This immigration is largely being fuelled by families moving from Victoria and New South Wales looking for the lifestyle that Adelaide offers, with less of the congestion found in the eastern states.

Adelaide’s rising population is placing upwards pressure on prices, as housing supply struggles to keep up with growing demand.

Net Interstate Migration To SA 2005-2020

With the pandemic lockdowns over and borders reopening, Australia is experiencing a huge increase in immigration.

The 2022-23 federal budget forecasts that population growth in South Australia will outpace New South Wales and most other Australian states.

This wave of migration is expected to increase demand for housing and partly offset the impact of rising interest rates in the short term.

Where to look for investment opportunity

Our analysis, based on historic population trends and land supply constraints, suggests Adelaide’s northern suburbs are where most population growth will be concentrated.

Since 2001, population growth has been greatest in the northern suburbs of Adelaide. This is due to the natural barriers of the Adelaide Hills in the east, the beach in Adelaide’s west, and the wine region in the south, all limiting large-scale development in areas other than the northern suburbs.

Property Investment Coaching modelling predicts that the latest surge of immigration will be strongest in the suburbs of Salisbury, Munno Parra and Angle Vale, where investors could see the greatest total return.

Population Change Since 2001

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