Why buy a home in Adelaide?
If you’re worried about the house price volatility some parts of Australia have seen in the past few years, Adelaide may be a prudent place to consider buying a home.
Compared against more tumultuous markets like Sydney and Melbourne, Adelaide has had a relatively steady few years, and according to Domain, has actually out-performed the rest of the country in the last year. While the median house price across all Australian capital cities declined to the tune of around $40,000 between December 2017 and December 2018, Adelaide house prices have gone up by $7,000 over the same period.
This may be partially due to Adelaide’s relatively low proportion of investors. Domain notes that while investors are retreating from the market nationwide, this isn’t affecting Adelaide to any great extent because the city’s house prices hadn’t been driven by investors in the first place. So if you’re hoping to become an owner-occupier, you may well be in good company in Adelaide.
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Adelaide’s population growth has also been sluggish. It grew by only 0.7% in 2016-17, according to the Australian Bureau of Statistics, and of the other capital cities, only Darwin had slower population growth during that period. This could mean that compared to some other major cities in Australia, demand for property in Adelaide may not be quite as intense.
On top of that, according to the Property Council of Australia, South Australia had the highest level of property sector confidence in the country as of October 2018. The approval of key infrastructure projects, including upgrades to the North-South Corridor, could also mean that the city’s livability is set to improve further.
If you are interested in buying in Adelaide, here’s some info on the city’s property costs, along with some of the considerations when looking for a home loan.
How much does property cost in Adelaide?
Adelaide has seen slow but consistent growth in its housing prices, with the city’s median house price going up by 3.8% per annum over the five years to June 2018, according to QBE’s Australian Housing Outlook 2018-2021 report. The report suggested this was primarily due to low interest rates and reasonably positive housing affordability. Moderate growth in the Adelaide property market is forecast to continue.
Comparing Adelaide to other capital cities, recent CoreLogic data shows how its median prices stack up.
|Median house price||Median unit price|
Source: CoreLogic – calculated across houses and units sold by private treaty over the four-week period ending 19 November 2018.
It’s important to note that prices can vary significantly from suburb to suburb. Some of Adelaide’s pricier suburbs have median house prices as high as $930,000 (Henley Beach South), whereas more affordable suburbs like Brahma Lodge have a median house price as low as $264,000.
What to consider when choosing a home loan in Adelaide
Adelaide is subject to the stamp duty rules that apply in South Australia, and it may be worth familiarising yourself with these, particularly when it comes to concessions that might be available to certain kinds of buyers and properties.
Adelaide buyers who are making their first step onto the property ladder might be eligible for the South Australian First Home Owner Grant. The eligibility for these grants can change from time to time. Visit the SA Government’s website for current details.
There may be some state-specific rules to consider before you start bidding on auction properties in Adelaide. For example, South Australian auction rules mean there’s no cooling-off period on properties purchased at auction, which means it could be a good idea to make sure you’ve done any necessary research on your property before the auction. Home loan pre-approval can also be helpful if you are considering buying at auction.
Top suburbs in Adelaide for capital growth
If you’re buying a property in Adelaide, the potential to sell it in the future at a profit may be a consideration. Here are the top 10 suburbs in the greater Adelaide area for capital growth (the value of the property increasing) over 12 months to August 2018. But remember, just because a suburb has performed strongly in the past, it doesn’t mean it will continue to do so in the future.
- Unley Park – 16%
- Clayton Bay – 15%
- Wayville – 14.6%
- Evanston Gardens – 14.5%
- Dulwich – 13.4%
- Rose Park – 12.9%
- Glenelg South – 12.0%
- Everard Park – 11.3%
- Hyde Park – 10.2%
- Waikerie – 9.9%
Source: realestate.com.au and CoreLogic.
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Possible pros and cons of buying a home in Adelaide
Adelaide may get less media attention than Sydney and Melbourne when it comes to its real estate and lifestyle offerings, but don’t be fooled – you may find plenty of potential benefits to living in South Australia’s capital. And as with any city, there may be drawbacks to factor into your thinking.
- Quite affordable compared to Sydney, Melbourne, and Brisbane, based on median house values
- Low-humidity, Mediterranean-style climate
- Proximity to renowned wine regions including the Barossa Valley and Adelaide Hills
- Many suburbs are just a stone’s throw from the beach
- The Adelaide Fringe Festival is thrown annually. It is the Southern Hemisphere’s largest annual arts festival and the world’s second-largest.
- Unemployment is relatively high compared to other capital cities according to the Department of Jobs and Small Business
- Lower density of shopping and lifestyle hubs compared to Sydney and Melbourne
- The climate can lean towards dry and hot for a large part of the year, which isn’t to everyone’s taste.
Is Adelaide a good location for property investors?
According to QBE’s Australian Housing Outlook 2018-2021 report, investor activity in Adelaide is at its lowest level in four years, but as previously mentioned, house prices in Adelaide are predicted to continue their upwards trend. In fact, the median house price is pegged to grow by 12% by June 2021. The report states that despite being in oversupply, Adelaide units are predicted to see a modest increase in median value of 6% by June 2021. Additionally, QBE appears confident that the oversupply will be absorbed in a timely fashion.
Adelaide – key facts at a glance
Nicknames: The City of Churches, Radelaide
Population: 1.38 million (2018)
Average summer temperature: 16.7 – 28.6°C
Average winter temperature: 8 – 16°C
Local delicacy: FruChocs
Interesting fact: Adelaide is Australia’s only state capital that was never settled by convicts