State of Markets - SA Feburary 2015

By Staff Reporter

The Adelaide market continues to record steady growth

In the 12 months leading up to December, CoreLogic RP Data reports that dwelling values in Adelaide grew by 4.3 per cent.

Although this figure is some way below the annual capital city average of 7.9 per cent, Adelaide recorded healthy growth in the final month of 2014.

Dwelling values rose by 1.8 per cent in December, positioning the city third in terms of growth in the state capital standings.

A recent report from Herron Todd White (HTW) highlighted some key areas in the Adelaide market for investors. The group summed up Adelaide’s 2014 performance as “remarkably steady and resilient given the negative sentiment currently surrounding local political and economic conditions”.

The report identifies the city’s southern suburbs as containing the most affordable housing opportunities. These locations contain “a selection of developing and established suburbs and therefore, a good choice of property type”.

The property valuation group explains that in line with population growth within these locations, there have been numerous shopping centres completed in recent times.

The outer-southern suburb of Seaford Heights is tipped to be the location for the first Aldi superstore in South Australia, while a $52 million upgrade looks set to transform the well-established Colonnades Shopping Centre.

HTW says that the outer southern suburbs’ close proximity to the coastline, with easy access to local beaches, adds to their appeal.

The report also commented on the state of the Mount Gambier market, where house sales are reported to be within the $200,000 to $250,000 range, with very few sales occurring over $400,000.

While property sales in the area have fallen since their peak in 2010, sales are up from 2013. HTW says  the increase in the number of sales could be from the rollout of $10.46 million to the region’s forestry sector from the state government.

The group adds that funding is expected to underpin around $20 million in new projects and employment within the industry.

In focus

Seacliff was first established as a fishing village and remained somewhat remote for many years. However, since the improvement of travel links to places like Brighton, Marino and, of course, inner Adelaide, Seacliff has become a popular lifestyle destination.

These days, most of the fishing boats have been replaced by sailing boats and paddleboards.

Seacliff’s shift from a maritime economy has changed the area’s demographic from lower socio-economic to mostly middle- and upper-income residents.

A lot of renewal is going on along the esplanade and on the land overlooking the beach. There is a pub on the headland and plenty of shops dotted around the beachfront.

Residents who want a premium retail experience can travel to the nearby Westfield Shopping Centre or the Brighton Mall.

The kinds of properties being constructed are typically small apartment blocks and large houses with views of the sea.

There is also a lot of redevelopment of older properties going on.

Seacliff’s rental market sees a lot of activity throughout the year. I feel that this area of the Seacliff market is particularly strong because of the close proximity of the Westfield.

Moreover, the Flinders University and Flinders Medical Centre are only down the road.

These institutions give landlords a lot of choices when it comes to tenants.

They can either buy a one- or two-bedroom property for university staff with small families, or purchase a five-bedroom home for students.

An investor could effectively turn one of these larger properties into a boarding house for students and make a very good return.

Properties close to the beach are often favoured by Seacliff tenants because many of them have never lived close to the sea.

There are also some good land‑banking opportunities close to the beach.

An investor could buy one of the older seafront properties and build two luxury apartments in their place. This strategy has worked very well further inland, where houses have been demolished to have courtyard properties built in their place.

Seacliff looks set to be one of South Australia’s stronger areas moving into the future.

The area is part of a wider beach strip that constantly experiences a high level of demand for property. There are great opportunities to be had, both for owner-occupiers and for those looking to rent out their properties.

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