One expert has said South Australia has proved to be a good property market over the past two years, but will it keep its good fortunes this year?
Right Property Group’s Steve Waters has helped investors get good deals across South Australia for almost two years now, allowing them to enjoy the capital growth and yield provided by the state’s property market.
The strategy is simple: Stay close to the central business district.
“We’ve done very well out of it, particularly in areas no more than 20, 25 minutes from the CBD – that’s our cut-off point, which is quite different from how we invest in other states.”
“Adelaide has done very well for us these past years,” Mr Waters highlighted.
However, following the significant declines in major property markets such as Sydney and Melbourne as well as the recent regulatory interventions and the banking royal commission, South Australia could be facing a slump soon.
“There will be an oversupply of units because there’s a lot of construction going on there. Just stick to the larger blocks.”
Further, yields are contracting across the state, particularly in Adelaide.
Moving forward, investors are advised to be careful because the ‘nice, steady and reliable growth and cash flow’ in South Australia might fluctuate.
Mr Waters encouraged investors to seek properties that present opportunities for adding value through renovation, subdivision or building.
According to him: “It’s about what I can do with them. I don’t want a 900 [square metre] block if I can’t do anything with it. It’s just a waste of space.”
“I want something that I can split in half. That’s what we’re looking for.”
While it’s advisable to stay close to the CBD, Mr Waters said that investment opportunities are also present in regional South Australia, but it may not be for everybody.
Even with yields often higher than some of the metro areas, regional markets could still be quite risky, Mr Waters said.
“We’ve invested in regional areas before and it’s done very well for us, but there’s a time and a place for regional.”
“There’s got to be a direct purpose for it in your portfolio. Don’t be dragged into it just because people are moving out there for affordability.”
At the end of the day, most metropolitan property markets carry stronger fundamentals that drive growth into the property market.
“There’s always a certain amount of jobs out there, a certain amount of population growth, but we can never forget that capital city markets like Sydney, Melbourne and Brisbane are the magnets for immigration and population growth and they always will be,” Mr Waters concluded.