Adelaide no longer the buyers' market that it was: HTW
Adelaide’s residential property market is in a slightly better position than it was 12 months ago, according to Herron Todd White.
" It is fair to say that it is no longer the buyers' market that it once was," the latest report by the valuation firm advised.
The number of days on the market has reduced, vendor discounting has tightened, sales transactions have increased and in that time there has been around a 3% improvement in median price.
Investment activity appears to have increased in the past 12 months or so as investors try to capitalise on the current market conditions that see vacancy rates remaining low, rental rates steady, and low interest rates persisting.
"With the property market in Adelaide having reached the bottom of the cycle investors are now more confident that property will start to see some improvement in capital growth in the medium to long-term," the report said.
With only a slight annual increase to Adelaide's median price, the report suggested $500,000 would still buy much the same as it would have last year.
It noted $500,000 can currently buy in the inner suburbs, less than seven kilometres from the CBD, including Norwood, Parkside, Unley and Prospect, but "more and more difficult" in older established suburbs located close to popular shopping strips and centres, and dining and café precincts.
"Proximity and access to the city is probably the biggest selling point for these areas."
Property within these suburbs that have a price tag of less than $500,000, can secure an older style two bedroom unit or attached cottage/maisonette on a small allotment.
"Tenant demand within these suburbs remains high, with very low vacancy rates as a result.
"Tenant demand should also maintain current rental rates with the potential for slight increases over time.
The current rental rate is around $350 to $500 which would roughly equate to a gross yield of 3.5% to 5%.
"Properties within these locations are also expected to experience solid capital growth in the long term with property investment in these suburbs somewhat akin to blue chip shares," the report said.
Within the next zone of 7 to 25 kilometres from the city $500,000 will purchase an older three bedroom house on a large allotment (500 to 900 square metres) or a newer three bedroom house on a smaller allotment (200 to 500 square metres).
"The older dwellings on large allotments have the possibility of renovation, extension or even sub division in the future to increase capital worth. "The prospects for solid long term growth are good.
"Yields in this area vary and would expect the average yield to be in the order of 4% to 5%."
Suburbs greater than 25 kilometres from the CBD considered to be the outer suburbs, include to the north, Elizabeth and Davoren Park where it is possible to purchase a basic two to three bedroom dwelling of 100 square metres on an allotment of 400 to 800 square metres for $130,000 to $200,000.