Q2 2021 Property Report
Quarter 2, 2021
We officially have bragging rights! Though, personally, I think we should have always had them.
Adelaide was named the third most liveable city in the world in the Global Liveability Index 2021. Six of the top ten cities in the March 2021 survey were in New Zealand or Australia, and we were the highest-ranked Australian city. Auckland, New Zealand and Osako, Japan ranked 1 and 2 respectively. A significant influence over Australia’s and New Zealand’s rankings has been the ability to effectively managed the pandemic and that our tight border controls have allowed residents to live relatively normal lives.
The survey rates cities across 5 categories: stability, healthcare, culture & environment, education and infrastructure. As expected, most cities have dipped across healthcare due to COVID-19. Some industry experts have called out for housing affordability to be included in the ratings, we would welcome the addition as Adelaide has an affordable median price compared to other capital cities in Australia and around the developed world.
Adelaide Property Market
Winter, normally the hiatus time in real estate is operating at full speed.
The Adelaide property market renowned for being ‘the slow and steady performer’ is no longer slow. Continued low listings and pent up demand is seeing good homes or A-grade investment properties being snapped up after their first open! We have stood in inspection queues that bend around corners for over 50 minutes waiting for our turn. We have placed offers on property knowing we are competing against 40+ other offers on the table. All of this frantic activity can make buyers, especially inexperienced buyers, feel pressured and stress.
Don’t let FOMO drive you to picking an inferior property or exceeding your budget!
We know this is easier said than done in this hot market. Control what you can control and be ready to act. Have your finances in place, understand your property goals and have a list of “must-haves” are and where the wiggle room is.
People talk about the housing “bubble” we are in, however, many experts, including ourselves, don’t feel this is a bubble, rather a strong market that will continue to soar for the remainder of 2021 and into 2022. Two leading indicators of the performance of a market are clearance rates and mortgage rates. And Adelaide’s clearance rates are high and national mortgage rates are low. The price boom in Adelaide continues due to this combination and economic growth, low listings, and high levels of local and interstate interest.
According to CoreLogic’s June Home Value index Adelaide has enjoyed strong growth, 5.6% for the quarter and 13.95% annually. Impressively Adelaide now has 45 markets with a median house value over $1m, more than double the number from a year earlier!
However, it is important to note we still have one of Australia’s most affordable capital city median dwelling values at $508,712.
Investor activity continues to grow, attracted to our affordable prices, low vacancy rates and strong rental yields. Vacancy rates have remained low around 0.7% all year and rental yields for quality properties are achieving 4 to 5%, if not more.
A word of warning for an investor, don’t pick a property just because you can afford it and the vacancy rate in that area is low. Low vacancy rates may indicate that you will secure a tenant quickly, however, there are many low vacancy rate locations that provide higher risk tenancies or are rental dominated areas that may restrain strong capital growth. Low vacancy rates are important when considering an investment property but they do not automatically make a property the right choice. Combining low vacancy rates with a high capital growth location, owner-occupier dense area and a value add opportunity at some stage now or in the future – you’re on your way to safeguarding yourself from a poor investment choice.
Investors aren’t the only buyers in the market, the market is thick with different types of buyers. First Home Buyers, upsizers, downsizers and prestige buyers are all in the mix. Family homes less than 10km from the city on decent blocks are in short supply and in high demand. We have been engaged by many first and family home buyers that tried to do it on their own for 6 to 12 months and have become increasingly frustrated as they watched prices climb and they just haven’t been able to find or secure the right property.
However, there is some relief coming to the market. We have noticed listings are on the increase, vendors that were once reluctant have realised it is a “seller’s market” and listing their properties. Increased listings mean the buyer pool will spread out and some of the pressure will be taken out of the market.
However, you may find if you adjust your criteria in this undersupplied market, you may have more luck. It could be flexibility around location, block size and modernness of the property. We recently helped clients buy their family home in just 4 weeks after they had been looking on their own for 12 months. How? We showed them a property one kilometre out of their preferred location that ticked every other box. You can read all about it in the case study below.
The increase in stock will provide some much-needed breathing space to the market and Corelogic has reported that nationally momentum is slowing. And we think it is too. This accelerated growth phase will slow, pent up demand is reducing, and whilst new demand is still outstripping supply the vast cavern between the two will reduce.
However, if you are waiting for it to go backwards you will be sitting on the sidelines for a very long time. We expect the market to perform strongly for the remainder of the year and into 2022.
Suburb to Watch
Edwardstown - "Perfectly Located"
Edwardstown is just 6.6km southwest of the CBD. It is halfway to the city and halfway to Adelaide’s popular beaches! It is a well-located suburb with a very attractive affordable median house price of $540,331 and it truly has everything that you need at its fingertips.
The train line connects the suburb to the city with a short 20-minute journey, but you can easily travel to the city, airport and beach within 10 minutes of leaving your house via car or taxi. The airport is close, but not too close. Edwardstown is conveniently at the opposite end of the flight path. Even though the suburb is only 2.3 square kilometres you get a second train station thrown in for free. Two lines operate throughout the suburb so not only is the town and the beach easily accessible but also Adelaide or Flinders University.
There are plenty of shops, restaurants, and eateries in Edwardstown and nearby. The A3 and the A2 bound the northern and eastern borders and are lined with commercial and retail shops, including the Castle Shopping Plaza with a number of retailers, supermarkets and eateries. Or if you want a mega shopping experience drive or catch the train 5 kilometres to Westfield Marion the largest shopping complex in Adelaide with 342 stores!
There are a number of unzoned public schools that you are close too including Edwardstown Primary School and a Catholic Primary School. You are zoned to Hamilton Secondary and there are a number of unzoned secondary options as well.
There are definitely pockets that are better than others in this well-located suburb. Avoid buying too close to the main streets on its borders and along the railway. There are a number of housing trusts and you just need to be aware of where they are. If you enjoy getting outside there are grassy parks, playgrounds and recreation areas a short stroll from most residences, which is great for families. Privately owned homes have nice landscaped gardens and are well looked after.
Edwardstown is a suburb on the move including its median price point, which we expect to increase due to the suburb’s central location. There is new development as people buy up the older homes and refresh or rebuild them. It truly is a hidden gem in Adelaide for budding investors that will see huge returns.
FHBs need help in a fast, competitive market
by Katherine Skinner
Katherine Skinner began her career in property over a decade ago in Melbourne working in Buyer’s Advocacy and Property Management. Returning to her home town of Adelaide in 2009, Katherine quickly established a reputation as an exceptionally thorough and diligent practitioner, providing outstanding customer service coupled with a calm and positive attitude while working with some of Adelaide’s most highly regarded agencies. Katherine was named the REISA Buyers Agent of the Year 2 years running, a REIA National Awards 2019 Finalist and is the current South Australia representative for REBAA.
0438 729 631 or email Katherine