Seaford market flat, but price increases likely down the track

A moderate rise in property prices, increased investor interest and a possible increase in rents close to transport hubs are the medium-term expectations for Seaford, South Australia, where a new railway extension that will link the suburb directly to the city is under construction.

The $291.2 million Seaford railway extension, announced in the May 2009 Federal Budget, is due to be completed in 2013. It will add 5.7 kilometres of track joining the current end-of-line stop, Noarlunga, to the Seaford District Centre with a stop in between at Seaford Meadows. Park-and-ride facilities will be available at both new stations, and 372 daily buses will service the Seaford District Centre.

In addition to the extension, a project is currently underway to electrify (from diesel) and re-sleeper the existing Adelaide-to-Noarlunga line, which, according to a spokesperson for the project, will result in quieter, more environmentally friendly trains.

Construction of the extension is due to be completed in August 2012. The project will then be handed over to the government for testing. Passenger services are due to begin running in 2013.

About 36kms from the Adelaide CBD, Seaford is a middle-class neighbourhood where many commute to the city or surrounding economic hubs for work. The new train line will mean an express journey from Seaford to Adelaide will take 35 minutes, 50 minutes on a normal service.

Photograph courtesy of the Department fro Transport, Energy and Infrastructure.

Values holding steady

To date the announcement and commencement of the project have not had a great impact on Seaford property values – depending on which statistics you believe.

Statistics gathered by WBP Property Group reveal that house prices in the postal code have followed the trend of the greater metro area, which is flat at present.

Median house prices for Seaford (postcode 5169)

Source: WBP Property Group

Bart Quinn, state manager for SA of WBP, says the outer Adelaide suburbs are particularly flat, “with agents reporting price falls of up to 10% in some suburbs”.

“This project will add to the overall amenity of the Seaford area, however, I expect prices will remain flat over the short to medium term,” he tells Property Observer.

A similar story is told by figures obtained from the Real Estate institute of South Australia:

Median house prices for Seaford

Source: REISA

REISA reported 0.49% growth in Adelaide house prices in the first quarter of 2011, taking the median house price to $410,000. Over the 12 months to March 2011 house prices increased by 1.23%. Statewide, house prices increased by a modest 0.14% during the first three months of the year and 2.99% during the 12 months to March 2011, with the median state house price at $379,000.

However, RP Data statistics paint a different picture, suggesting the project is already having an impact on house prices.

Median sale prices for Seaford houses

Source: RP Data

According to RP Data, the median price of a house in Seaford hovered around the $300,000 mark up until the end of 2009.

During 2010, when construction of the railway line extension began, house prices started to rise steadily, and by the end of the year the median price was more than 10% higher, at $339,000. Prices have jumped again in the first few months of 2011, with RP Data putting the median price at the end of April at $350,000. Average weekly rent is $180. According to RP Data, Adelaide house prices grew by 2% in the 12 months to January 2011.

A search across realestate.com.au shows just 33 houses for sale in Seaford, ranging from $299,000 for a two-bedroom, one-bathroom house to $399,000 for a three-bedroom, two-bathroom property, marketed by the agent as an investment property.

Investor opportunity

Quinn says recent reports from local agents indicate an increase in investor enquiry about the Seaford area.

“Experience shows that interstate investors often demonstrate greater interest in new infrastructure project than local residents. This is probably because local residents are unlikely to sell an existing home simply to take advantage of new infrastructure development in a nearby area,” he says.

As a result, he does not expect a dramatic increase in buyer activity, and says the extension is not likely to greatly impact values in Seaford and Seaford Meadows.

However, investors looking to leverage off the railway extension may find good opportunities if they pick up properties for a good price close to the two proposed stations.

Quinn says rental costs for these properties might increase over the long term.

Greg Nybo, president of the Real Estate Institute of South Australia, says Seaford will benefit from the transport infrastructure and applauds the railway project currently underway.

“Anything from transport point of view is a good thing. The southern suburbs are ever expanding. As the population goes up, there is a greater need for improved transport services,” he says.

He says people in the community are excitedly awaiting the arrival of the train: “With fuel costs rising, they are looking for an economical manner to get to work.”

As for house prices, he says all major infrastructure projects help, as they make an area more attractive, but as with all property, it’s about supply and demand.

Agents optimistic

Agents operating in the area expect the project to make Seaford more attractive and bring in buyers 

Kerri Cook, property management and selling principle at Ray White Seaford, says there is strong interest in land around Seaford Meadows and also interest in nearby Aldinger Beach.

“We are quite excited about the development. Prospective buyers are being more proactive with properties coming up in the area,” she says.

“I expect more people will look to move south. Previously it has been considered too far. A journey into the city on public transport would take about an hour. The train will cut this down to about 35 minutes.”

Sentiments from Andrew Koukourou, principal at Century21 South Coast, reflect the available data: “The market is fairly flat, but there is lot of talk. I come across people all time who are talking about it in a positive light.

Koukourou expects the new line will have a positive impact on prices: “Once it is launched, the train line will be electric, efficient and quite an economical method of transport.”

But Quinn warns investors to tread cautiously: “Selecting real estate on the basis of proposed infrastructure development is speculative and can be risky.”