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Affordable & Liveable Property Guide 1st Half 2021 | Adelaide

Overview

Median property prices in Adelaide Metro increased by 9.5% for houses to $575,000 from Q1 2020 to Q1 2021*, and by 2.8% for units to $421,000. Across the same period, total sales in Adelaide Metro increased by 23.0% (to 3,721 sales) for houses and by 27.5% (to 1,952 sales) for units.

Adelaide Metro’s median price growth occurred amidst increased sales activity which indicates real returns in capital investment. This should fuel owner-occupier confidence. Furthermore, there is a decline in average days on the market of -14.6% (to 76 days), thus, confirming Adelaide Metro as a highly demanded market.

In the 1st Half 2021 report rental performance within each suburb was reconsidered.   Suburbs with an average rental yield marginally below Adelaide Metro could be chosen as an affordable liveable suburb, as the impact of COVID-19 on the property market was most evident in this investment criteria.

Another interesting finding is that majority of the chosen affordable and liveable suburbs are located within the north side and middle ring of the Adelaide CBD. This is a clear indication of the preferential relocation out of the CBD due to flexible working arrangements. This is further confirmed by record low vacancy rates in middle-outer ring areas of 0.3%.

Table 1 highlights top suburbs in Adelaide Metro based on price growth and total estimated value of projects commencing in the 1st half of 20212.

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Access to Market

The dominant proportion of homes sold in Adelaide Metro across 2020/21# were in the premium price bracket of $700,000 and above (26.1%). Units recorded a dominant lowest price bracket of less than $399,999 (24.7%). There is a split market in both property types, with premium and lower end markets making up sales almost equally. Thus, there is a home for all budgets.

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Affordable & Liveable Suburbs

To identify affordable and liveable suburbs, premiums of 14% for houses and 9% for units were added to the South Australian (SA) average home loan, which were below or on par those required to reach Adelaide Metro’s median prices (48% for houses and 9% for units). Thus, the chosen suburbs have a median price below that of Adelaide Metro’s, meaning that the suburbs identified within this report are more affordable for buyers.

Considering all methodology criteria (property trends, investment, affordability, development, and liveability), Tables 2 and 3 identify key suburbs that property watchers should focus on.

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Investment Opportunities

In March 2021, house rental yields in Adelaide Metro were recorded at an attractive 4.2%. In the 12 months to Q1 2021, the median house rental price increased by 10.0% to $440 per week, which is further complemented with average days on the market declining by -17.4% (to 19 days).

In March 2021, Adelaide Metro recorded a significantly low vacancy rate of 0.8%, well below that of Sydney Metro (3.4%) and Melbourne Metro (4.4%). Vacancy rates in Adelaide Metro remained well below Real Estate Institute of Australia’s healthy benchmark of 3.0%, even throughout COVID-19. Furthermore, Adelaide Metro’s vacancy rates continued to decline since the peak of COVID-19 in April 2020, making Adelaide Metro an attractive alternative metro area for investment.

This indicates that the Adelaide Metro rental market continue to present strong growth and resilience throughout COVID-19.

Methodology

This affordable and liveable property guide for Adelaide Metro analyses all suburbs within a 20km radius of the Adelaide CBD. The following criteria were considered:

  • Property trends criteria – all suburbs have a minimum of 20 sales transactions for statistical reliability purposes. Based on market conditions, suburbs have either positive or as close as possible to neutral price growth between 2019 to 2020/211.
  • Investment criteria – as of March 2021, suburbs considered will have an on-par or higher rental yield than Adelaide Metro, and an on-par or lower vacancy rate.
  • Affordability criteria – identified affordable and liveable suburbs have a median price below a set threshold. This was determined by adding percentage premiums to the South Australian (SA) average home loan, which was $387,2723 as of Q4 2020. Premiums of 14% for houses and 9% for units were added, which were below or on par to those required to reach Adelaide Metro’s median prices (48% for houses and 9% for units). This places the chosen suburbs below Adelaide’s median prices, meaning that the suburbs identified within this report are more affordable for buyers.
  • Development criteria – suburbs identified must have a high total estimated value of future project development for the 1st half of 20212, as well as a higher proportion of commercial and infrastructure projects. This ensures the suburbs show signs of sustainable economic growth, in turn positively affecting the property market.
  • Liveability criteria –  all identified suburbs have low crime rates, availability of amenities within a 5km radius (i.e. schools, green spaces, public transport, shopping centres and health care facilities), and an unemployment rate on-par or lower in comparison to the South Australian average (as determined by the Department of Jobs and Small Business, December Quarter 2020 release).

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PRD Affordable and Liveable Property Guide 1st Half 2021 - Adelaide