Thinking of buying an investment property in Adelaide? Whether you’re a seasoned investor or buying your first investment, the Adelaide property market has some unique characteristics you should know about.
The capital city of South Australia has gained a lot of traction over the years. Perhaps it’s the convenience of city living, offering access to dynamic local industries and top academic institutions. Or perhaps it’s the incredible nature in your backyard, with gorgeous beaches and award-wining wineries.
Either way, across the globe and Australia, home buyers are considering Adelaide as a no-brainer when it comes to property investment.
So let’s dig in deeper to find out why it’s such a hotspot. But before we do, let’s first explore what makes a ‘good’ investment property.
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What makes a good investment property?
Investing in the property market is considered a safer bet for many because housing will always be in demand. It can provide the investor with a steady stream of cash and ideally, a profit, if the rental payment is more than the cost of the monthly mortgage repayments and maintenance costs.
When choosing to invest in real estate, it’s vital to do your research first, even before speaking to professionals. Here are important factors to look out for:
The neighbourhood
You’ve heard it before but we’ll say it again: location, location, location.
Think about the renters you’ll attract based on the suburb and region. Buying a home near a university, for instance, will mean you’ll be renting out to students who might not need the property during summer holidays. The risk is needing to find new tenants regularly.
Taxes on property
Property taxes will usually depend on the council districts in each state. So make sure you factor these into your expenses. You can read more about this on the government website.
Schools
If you’d like to attract young families, you’ll want to consider the schools in the area as that’s a big priority for families when it comes to choosing a home. Good, quality schools will not only lure tenants but also ensure the value of your property if and when you choose to sell it in the future.
Safety
We don’t need to tell you why safety should be a priority in your research process. All tenants want to live in a safe neighbourhood with low crime rates. Do your due diligence before signing anything.
You can check crime rates here, but also look out for pretty crime and vandalism. Also look up the local law enforcement quarters in the area to see how far away they are.
Job opportunities
While you’re doing your property market homework, keep an eye out for any big companies making a move to your area of choice. Chances are, employees will want to live nearby and this will drive up demand.
Convenience and accessibility
Take a look at the neighbourhood you’ve chosen. What are the local amenities? Are there nice parks, eateries and easy access to public transport? These are the types of things tenants want checked off their list.
Do a local search of the suburb and see what’s around.
Developments in infrastructure
Check out the local council to see if there are any major plans for development in the neighbourhood. Of course, new roads or highways can be a good thing, but also a deterrent because of the noise during construction.
This also applies to new property developments which could impact rental prices.
Average rent in the area
When you’re doing your calculations on rental yields, you’ll need to price your property accordingly. Knowing the average rental prices in the area will help you do that.
When calculating rental yields, make sure the rental price covers your mortgage payments, taxes and other maintenance expenses like renovations and agent fees.
Listing and vacancies in the area
Set up your match profile on Soho with your choice location—are there lots of listings in the area? If so, it may imply that the suburb is in less demand which means rental prices have to be lowered to compete with other landlords.
Fewer listings on the market means prices can be raised.
Risk of natural disaster
Homes in areas with high risk of natural disasters like floods, bushfires and earthquakes will often be priced lower. Insurance will come into play here, with your premiums increasing when the risks are higher.
This too should be factored into your rental income.
Why should I buy an investment property in Adelaide?
The past five years have shown Adelaide to be a dependable opportunity for property investment.
Even from the onset of the pandemic in 2020, Adelaide and the state of South Australia managed to prevent large economic drawbacks. Consumers and businesses experienced continued growth despite the onslaught of other cities.
Adelaide’s strength is in industries like alternative energy and tech innovation, building recognition from other regions. Investments were made in improving the city’s infrastructure, supporting general liveability and in turn, creating and supporting jobs in the marketplace.
In the past month, despite the general downturn in Australia’s housing market, Adelaide has maintained a steady pace. Whereas in the capital cities, June housing prices fell by by 1.6% in Sydney, and 1.1% in Melbourne, according to Corelogic data.
In the Adelaide property market however, housing values are increasing by over 1%, bringing the median dwelling price to $642,470. Affordability is where Adelaide dominates the housing market, especially compared to other capital cities like Sydney and Melbourne.
Experts are saying Adelaide is on an upward trajectory, with high demand and low supply influenced by the investors in the east catching onto this trend.
Rental properties are also in favourable conditions for investors. The rent price growth is up while vacancy rates are low which means landlords are able to reap high yield on rent.
Where should I buy an investment property in Adelaide?
More and more investors are finding the Adelaide property market a safe venue to secure returns on capital growth. A consistent performer, it also requires less initial capital—a $500,000 investment property in the city would be doubled in price in Melbourne or Sydney.
So as an investor, where do you start? Let’s explore some of the best suburbs in Adelaide to invest in.
Belair SA
- Median house price: $969,500
- Median rental price: $585/week
The suburb of Belair is experiencing a significant amount of growth at the moment. It’s a tight market, which means rental properties don’t come up on the market often, granting landlords the chance to increase their rental prices.
The median house price has risen by 7% in the last quarter showing that demand for the suburb is high and that isn’t about to change anytime soon.
Eden Hills SA
- Median house price: $737,500
- Median rental price: $570/week
Eden Hills is also one of the very desirable suburbs. Its affordability, for one, is a large draw for first home buyers, along with the local amenities and quiet, countryside feel.
This past year, price growth on homes for sale has gone up by 8.55%. The median gross yield is 4.14% which is considered very satisfactory.
Broadview SA
- Median house price: $670,000
- Median rental price: $450/week
Similar trends are seen in Broadview, SA as well, where market value is rising. This suburb is highly sought-after, conveniently located just 10 minutes outside of the city by car.
Since 2013, there has been a wave of buyers snagging older properties and lots of land and building beautiful new homes. Aside from the curb appeal, Broadview offers an impressive range of quality schools as well.
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