- South Australia leads the Australian property market according to an expert
- High-performing regions show significant growth and future potential
- Affordable areas with robust economies are outperforming counterparts
Despite property values declining across the country, South Australia has come out on top as the nation’s leading market for homebuyers according to an expert.
In a new whitepaper, buyer’s agency InvestorKit found that the South Australian property market has been a stand out since 2022 for many reasons, including affordability, economic recovery, improvement in internal migration and heavy infrastructure investment.
CoreLogic data shows that even during the record run of interest rate hikes, Adelaide’s dwelling values increased by 10% with regional areas surging by 17%, which is considerably higher than their other state counterparts.
More growth ahead
InvestorKit head of research and founder Arjun Paliwal said that there are a number of regions in South Australia that are showing impressive growth and should continue to see further increases in value.
“Several SA3 regions in South Australia have been exhibiting impressive performance since the beginning of 2022, and it’s also been a top performing state across the country,” said Paliwal.
Paliwal said that Barossa, Mount Gambier, Tea Tree Gully, Onkaparinga and Adelaide Hills are all performing incredibly strongly and have further upside potential.
“They have demonstrated exceptional performance in the preceding year, and based on their economic and property market indicators, it is expected that they will continue to outperform in 2023.”
Arjun Paliwal, InvestorKit head of research and founder
Affordable locations to perform
According to Paliwal, Barossa benefits from a low-cost lifestyle and a great quality of life.
“It has had an increase of 13.5% over the last 12 months, and in the past 10 years, the median house price has increased by 47.8%.
“Although the sales volume is slowly trending down and the price is not growing as fast as last year, we do not see its growth stopping anytime soon considering the high market pressure and affordability.”
With only 16% of properties in Barossa as rentals, the strong owner occupancy has led to an extremely tight rental market in recent years, with the vacancy rate hovering around 0.1%.
Paliwal said that Mount Gambier is also a strong performer which has been helped by the fact it is the centre of a large transport industry.
“Its median house price started surging in early 2022 and is currently sitting at an affordable level of $380,000.”
“It has increased 26.7% over the last 12 months, and in the past decade, the median house price has increased by 61.7% which is in line with the long-term average growth.
While Mount Gambier’s rental vacancy rates have been trending downward over the past decade and reached the lowest level in 2022 at 0.5%.
Tea Tree Gully should also be a focus for investors according to Paliwal given it has a good mix of strong economy, relative affordability, lifestyle and growth prospects.
“Its house price has been surging since 2021, up by 42% in two years, much higher than Adelaide’s average of 31%.”
“However, its median price of $620,000 still sits lower than Greater Adelaide’s $645,000. In the past 10 years, the median house price has increased by 74.6%.”
“Although Tea Tree Gully is currently slightly overvalued, it is still relatively affordable compared to many other Adelaide sub-regions that offer similar facilities and lifestyles.”
The rental market in Tea Tree Gully is extremely tight, with a 0.2% vacancy rate.
North-South Corridor to benefit
Paliwal said that Onkaparinga has a median house price of $575,000, one of the state’s most affordable which has helped the region grow steadily in the past year even under rising interest rates.
“Over the past 12 months, the median house price has increased by 16.8% and in the past 10 years a total of 74.8%.”
“The region’s unemployment is not the lowest in Greater Adelaide but has improved a lot in recent years, and now sits at the lowest level in a decade.
“The $5.4 billion worth North-South Corridor is set to further boost the local economy by creating thousands of jobs and business opportunities.”
The rental market has been under extremely high pressure in Onkaparinga, as the vacancy rate has been hovering around 0.1% for a year.
Meanwhile, the Adelaide Hills with Mount Barker as the main town, has been growing rapidly into one of Greater Adelaide’s top performers in recent years.
“The median house price for the Adelaide Hills has been rising since 2021, increasing by a total of 15.6% over the last 12 months, currently sitting at $651,200.”
In the past 10 years, the median price has increased by 58.8% and Paliwal said he expects it will continue to show the same figures over the next decade.
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