Herron Todd White‘s latest Month in Review reveals SA may provide a “safe haven” for investors in 2023. Image: Canva.
  • SA's history of short-lived and marginal downward property cycles may attract investors this year
  • The state's investor activity ticked upward in December 2022, defying national trends
  • Investors are motivated differently depending on a property's proximity to the CBD

While nationwide investor activity has been in decline since the first signs of interest rate hikes in 2022, Herron Todd White‘s latest Month in Review report found South Australia went against this trend.

For more, see reports on Perth, Canberra, Darwin, Brisbane, Sydney, and Melbourne.

Australian Bureau of Statistics (ABS) data reveals a 4.4% decrease in investor loan commitments across the country in December. The value of new borrower investor loans also dropped by 28.3% year on year to $7.89 billion.

Herron Todd White Property Valuer Nick Smerdon explains that figures from South Australia paint a different picture.

“South Australia bucked this trend in December, recording a 2.3% increase in new investor loan commitments which is the first increase in this metric since June 2022.”

“With a strong rental market and long history of short-lived and marginal downward property cycles, South Australia may provide a safe haven for investors in 2023,” he says.

Driving rents upwards

According to the Month in Review report, Adelaide investors are motivated differently depending on a property’s proximity to the CBD.

Within the outer ring of the city, the investor market has historically been driven by rental yield and capital growth within the middle and inner rings.

Adelaide Meidan Property Asking Prices 

Smerdon says he has observed tightening rental returns in Adelaide’s outer ring as price levels increased sharply.

He says that demand for rentals remains at historic highs. The latest data from SQM reveals a vacancy rate of 0.5% across the city.

Adelaide Residential Vacancy Rate.

“Gross yields of three to 6% are common within the established suburbs in the outer ring. Advertised rents range from $300 to $600 per week with suburb median house prices ranging from the mid $300,000s to mid $700,000s,” Smerdon says.

The Month in Review report indicates that within Adelaide’s inner and middle rings rental returns eroded as values increase and attainable rentals reach a ceiling.

“Advertised rents range from $400 per week and cap out at $1500. Suburb median price levels vary through the inner and middle rings ranging from the high $400,000s to $1.5 million plus.”

SQM data reveals that units in Adelaide tend to produce a higher rental yield than houses.

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