SA Property Market Insights – Q1, 2020
Quarter 1, 2020
Market Overview
Wow! This Quarter is not ending how it started. I did not expect to find myself buying ‘essentials’ for my interstate clients who were moving to Adelaide and would have to self-isolate for 14 days upon their arrival.
JANUARY
January is a quiet month within the Adelaide Market, and 2020 was no different for the first two weeks. However, the last half of the month saw stock levels increased dramatically, which after months of basement levels was extremely exciting.
Buyer sentiment was at an all-time high across the metropolitan area. Low interest rates and the high-performance of our affordable housing market was consumer confidence. Performance was tracking above expectation, with 5% rental yield being the new “norm” for sub $500,000 purchase price.
The market was thriving, and we were settling into a promising 2020 eagerly awaiting the busiest time in Adelaide – Mad March.
FEBRUARY
February saw the media storm surrounding COVID-19 rear its head with journalists predicting instability in our economy and housing market.
February was the month of the homeowner. Owner occupiers vying for properties were driving prices far in excess of where we would place particular properties and not making them a viable high-performing investment. There were still plenty of optimistic investors around looking for good opportunities, however, investment grade stock was selling fast and often sight-unseen. This was a sign of desperation when people are missing out regularly and just want to get a purchase made – a very dangerous game indeed.
House prices in many of the Western suburbs have exceeded all expectations, and investors looking within this region really needed to be educating themselves prior to proceeding with an acquisition.
The Northern Expressway is due to open in March, and whether this will significantly impact housing prices in those regions is unknown. School zones are still extreme growth drivers within the family home market, so if you’re investing it is always advisable to know your zoning and work out whether the demand for high quality rental within that area will outweigh the premium price you will pay.
MARCH
Rumblings about a new virus in China had commenced in January but I don’t think anyone realised where we would be in March.
The World Health Organization (WHO) declared it a pandemic and named the Coronavirus illness COVID-19. It has since spread to at least 170 countries and territories.
Self-isolating and social distances has become the way of life as Australians desperately try to flatten the curve.
The early rumblings had not deterred the real estate market, we were still seeing good clearance rate and FOMO had no dissipated. However, as the economy started to feel the pressure of this public health issue and people started losing jobs, sentiment started to slip.
On March 25th the Federal Government announced that ‘open for inspections’ and ‘public auctions” had to stop. Here is Adelaide we do not have the same love affair with public auctions as our sister capital cities Melbourne and Sydney. Private treaties have always been the more popular method of sale. That being said, there have still been many online auctions scheduled, with most actually selling prior to, which is a sign of uncertainty in vendors who want to secure the sale.
Private inspections are still allowed and are quickly becoming the norm. It does make it hard for the selling agents to find the time, but we are all adjusting, and adjusting quickly to this new way of operating. We received an influx of calls from agents prior to the discontinuing of public auctions and OFI, as they knew we had qualified buyer and were keen to set up deals.
The overall impact on the local market and economy in relation to the Coronavirus is still unfolding. However, we expect vendors will start sitting it out, if they are in a position to do so, rather than adding their property to the market. Continued low stock levels should keep the market competitive but we expect the steady race to the top for prices will stop. Buyers will become more cautious and only the serious purchasers will stay active in the market.
The one thing we wish to emphasise is the property market has always cycled through periods of decline, stability and growth. Quarter 1 saw Adelaide enjoy some of the highest clearance rates at auction in 5 years. There is light at the end of the tunnel and the property market will bounce from any losses. People always require housing.
The main thing for now is that we all take care, heed advice from authorities and not put others or ourselves at unnecessary risk. We are extremely lucky to live in a country with one of the best medical systems in the world. We will get through this, but for the time being there will be some pain. Don’t panic, support your local small businesses, check-in on those around you and take care!
We suggest anyone who is unsure or wanting some advice, please reach out to us as we are available anytime for a discussion around your situation and the best way forward in this extraordinary time, we are in.
Suburbs to watch
The suburb reviews were written in early March before strict self-isolating rules came into play. We have decided not to rewrite them, as we believe the reviews provide a longer-term view of the suburb. Local shops and business may close during the pandemic, but we believe that given time they will return. The pandemic does not alter their locations, access to transport, their parks, schools and essential amenities.
Valley View - "Country Living Close to Town"
Overview
This 3 square kilometre suburb it is names Valley Views for a reason! It provides magnificent views west out to the South Australian coastline. The suburb is 12km North East of the city and is home to 6,097 residents.
The family friendly suburb has 14 parks covering nearly 12.5% of total area. The suburb is quiet but has all the necessary amenities in reach. Locals on homely.com comment that “you are surrounded by nature, friendly neighbours and great walking trails.
Shop and Eat
The local shopping centre is Foodland Valley View. Foodland is an Australian supermarket with over 120 locations, primarily in SA.
Nearby is a Woolworths in Gilles Plain and a Coles in Ingle Farm (both less than 2kms away). Ingle Farm has a large shopping centre with everything you could need including banks, healthcare, beauty, fresh food and clothing and accessories stores. A smidge further is the Westfield Tea Tree Plaza with more options including cinemas, restaurants, an array of department stores and other retailers.
Exercise and Play
With 14 parks covering nearly 12.5% of the 3-kilometre suburb there are lots of nearby parks and playgrounds. The largest park is Thomas Turner Reserve on Nelson Road and everyone raves about the Dry Creek walking trials that take you from the suburbs to the country. Dry Creek runs through Thomas Reserve from east to west and divides the Valley View golf course from the other areas in the park.
Move and Transport
The suburb is serviced by the main road Grand Junction which connects the A10 to the A16. The A10 provides a straight run into North Adelaide and the ring road. The A16 will take you East to Port Adelaide and beautiful Semaphore Beach.
There is fantastic public transport via the Obahn Bus System that can take you to the city or Tea Tree Plaza.
Learn
Contained within its small borders is Valley View Kindergarten and there is a smattering of primary and secondary colleges just outside its border and within walking distance. Including Prescott Primary, Ingle Farm East Primary, and Wandana Primary. And whilst it bears its namesake it is technically outside of its borders, Valley View Secondary School. St Paul’s College is also in walking distance, literally on the southern border on Grand Junction Road
Housing
Valley View is full of good-sized family homes and generous blocks over 600sqm in most instances.
It is becoming increasingly popular with young professionals and families who want the space, convenience of location and transport options at a very reasonable price.
Given its location, Valley View homes are quite often set on sloped blocks of land. This rules out future subdivision potential and will, in some cases, keep the price down compared to its counterparts lucky enough to be built on flat blocks.
The average rental yield achievable in Valley View, sits approximately 5%.
Purchase Example
5 Beds | 1 Baths | 4 cars | Sold $506,000 | Agent Listing
Dreaming of a central yet peaceful location? This property offers a lifestyle of instantaneous family excellence with its spacious layout. Positioned in the popular area of Valley View, this superb newly renovated home on 787 m2 (approx) of land will surely tempt all who know quality and style. This large home features four bedrooms, separate study, stylish updated central bathroom with bath and a light filled laundry.
Stepney - "Village Lifestyle Minutes from City"
Overview
Stepney is a tiny and often overlooked suburb but for its small size, it definitely packs a punch. Everything is a short walk in this inner east small triangular suburb of Adelaide, even its more popular and well-known neighbours including Norwood.
Stepney contains a mix of retail, manufacturing, professional services and distribution outlets within a cosmopolitan population. It is known for having a village atmosphere and lush green streets.
Shop and Eat
The main shopping street in Stepney is on Nelson Street and it is home to the Avenue Shopping Centre. The Avenue houses all the staple shops that one could need, a Coles, Priceline, and speciality shops including butcher, florist, newsagency, beauty and a post office.
More shopping and service options continue on Nelson Street, Magill Road and Payneham Road.
Moreover, at only 3kms from the CBD and North Adelaide, your shopping and eating options are really endless.
Play and Exercise
Stepney is also home to the state-of-the-art healthcare hub, Sportsmed Stepney Healthcare, it features a range of services and facilities, including South Australia’s only purpose-built orthopaedic hospital, two specialist clinics, a pathology centre, radiology suite, pharmacy, onsite café and a boutique gym.
Stepney’s lush green streets lead to Linda Reserve which is a lovely place to take a walk, ride a bike or have a run around with your kids or dog!
There is an indoor sports arena, ICA Sportworz, that organises indoor cricket, netball and soccer games and hosts children’s parties and school holiday fun.
Move and Transport
Whilst everything is walking distance in Stepney it is always nice to have easy transport options. As Stepney is near town and bounded by major roads, is well serviced by buses.
And for those feeling a little more adventurist jump on your bide and ride into town!
Learn
Stepney is home to several early learning options, including Agnes Good Kindergarten, Treetops Earl Learning and St Peters Child Care but for government primary and secondary colleges you will need to look outside its small borders into neighbouring suburbs. Options included Norwood Primary School, Trinity Gardens, East Adelaide School and St Peter’s College.
Housing & Price
Stepney is known for gorgeous stone-fronted character homes. They range from single-front 2 bedroom homes, to luxe 4 bedroom homes, all on relatively small blocks compared to surrounding suburbs. This doesn’t stop Stepney from being a sought after location for young families and professionals who desire the ease of commute into the city, while enjoying the lifestyle the area provides.
Purchase Example(s)
4 Bed | 2 Bath | 2 Cars | Sold $1,164000 (2019) | Agent Listing
Comprising 3 bedrooms BIR’s in each plus study, formal lounge and 2 sparkling bathrooms luxury ensuite to Master, everything’s already been done. Just minutes from the city, Stepney is high on the list of most desirable Adelaide Suburbs. Perhaps it’s the walk to The Avenues for a coffee, or a little further to The Parade! Or maybe it’s because of the valuable Adelaide Botanic High School Zoning or the Primary School zoning for East Adelaide Primary.
2 Bed | 1 Bath | 1 Car | Sold $686,500(2019) | Agent Listing
Offering a unique floorplan, this single frontage cottage currently accommodates two divine bedrooms with high ceilings, polished floorboards and has recently been refreshed. Find this sublime character residence within walking distance to the fabulous Nourish’d Kitchen at the end of the street, public transport, Norwood Parade and local shops and eateries of Magill Road.
Vacancy Rates and Median Prices
Adelaide Q1 Vacancy Rate 1.0%
In Adelaide, it was a fabulous quarter, for both landlords and tenants. Lots of quality homes hit the market in all price points and locations, they were met with great demand from quality tenants ranging from singles through to families. For us, we saw a good mix between young couples and families taking up leases with us. Every property we had available achieved the top end of the rental assessment we suggested and in a very quick time frame with multiple applications for owners to choose from.
The quarter didn’t end as we had expected, although still strong with great demand and level of enquiry, some changes have had to be made to the day to day processes of Property Management, in particular leasing homes with the impact of COVID-19. Into the second quarter, we expect to see some urgency in the marketplace for both landlords and tenants. So far, private inspections for properties has been working really well. This has seen properties inspected very quickly after being advertised which has allowed us to assess where the home sits in the market (appeal/price) earlier than normal.
On the flip side, properties that already have tenants in place, could be at risk of tenants that have lost work not being able to afford the rent on an ongoing basis. We have been advising tenants to speak with Centrelink and see what support they can access, whilst also speaking with landlords to ensure we can come to an arrangement that is as low stress for all parties involved, and the best for the long term.
Rental payments and the ability to do so on a national level has become a volatile topic and is stilling being discussed at a National Cabinet level, however a 6-month mortarium on evictions has been announced. The Real Institute of Australia has been quite vocal with the president Adrian Kelly recently saying he welcomed the Minister for Housing Michael Sukkar’s words on clarifying what a moratorium on evictions means.
“A moratorium on evictions doesn’t mean rent is not payable, it is. If circumstances mean that payment in full is not possible it is a holding off from payments, not a cancellation,” said Mr Kelly. “It is for people who cannot pay at this time not for those that can.
“If you can pay your rent now, you pay it. “If you can’t pay your rent now, you have been given grace for six months, but will have to catch up when you are able to pay it again.”
As always, we encourage as much communication as possible from tenants and landlords so that we can work through this time and adjust where possible.
by Katherine Skinner
Director
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 2018, a REIA National Awards 2019 Finalist and is the current South Australia representative for REBAA.
0438 729 631 or email Katherine
As we were conducting our purchase of a rural property to relocate from Sydney, your property searching and buying process was complete and very comprehensive.
We were able to find the right property in a short amount of time, with minimum fuss and stress-free.
We really appreciate the expertise you brought to the process, your honest and excellent communication skills. You listened carefully to our requirements brief and carried out a very thorough research to present options matching that brief.
At all times you impressed with your updates, sharing of ideas and presenting opportunities. We views you as a partner and are forever grateful.
We would highly recommend your services to family, friends and colleagues.