adelaide is australias property underdog being ignored by investors
Hotspotting’s Tim Graham delves into why Adelaide’s property market is being overlooked, and what the city has in store for this year. Image: Canva.
  • Adelaide's economy was predicted to tank after car manufacturing ceased.
  • The city has instead seen a successful pivot to a more diverse and vibrant economy.
  • The Adelaide property market remains among the most affordable in the country.

Buyers are constantly overlooking one of the best markets in Australia to invest in, despite its affordable prices and good yields.

Weekly asking prices for Adelaide

Adelaide had some of the best price growth in 2023 and all the fundamentals were in place for further growth in 2024, but for some reason, it was constantly overlooked by investors.

Rental yields for Adelaide

I think some of it is a hangover from when there were a lot of doomsayer predictions about how the economy in Adelaide would tank once car manufacturing ceased.

That never happened and for the first time ever this year, Adelaide’s economy took out the number one spot in CommSec’s State of the State report which analyses the performance of the economy in every Australian capital city.

The Adelaide economy successfully pivoted from its manufacturing background to position itself as one of Australia’s leading technology, alternative energy, education and defence economies.

Whichever way you look at it, Adelaide had a stellar year in 2023 – but this is a continuation of the South Australian capital’s strong performance over a number of years.

We closely monitor sales activity in all the markets across Australia and Adelaide has produced consistently strong numbers in the past three to four years. Our latest survey of market activity shows that most suburbs in Adelaide are busy markets with rising transaction numbers which is generally a precursor to future price growth.

Good market performance is spread across Greater Adelaide, but most notably in the bottom-end areas and some of the middle market precincts. Consistency has become the key defining feature of the Adelaide market.

Despite solid price growth in 2023, house and unit prices are still extremely affordable by east coast standards with a good supply of homes in the $300,000s and $500,000s.

The market has shown resilience during downturns in other cities and continues to perform well, with CoreLogic data showing an 8.6% increase in median house values and 10.2% in unit values in 2023.

There are three key factors underpinning the ongoing demand in the Adelaide market:

  1. The economy continues to thrive from the state’s innovation in the areas of technology and alternative energy, as well as being a key location for education and the Defence Industry;
  2. Despite recent good growth, Adelaide is considerably cheaper than Sydney, Melbourne, Brisbane, or Canberra; and
  3. The market is resilient and consistent. In 2022, when prices generally fell in the bigger cities, Adelaide continued to deliver price growth and that steady performance has continued.

Adelaide continues to have one of the tightest rental markets anywhere in Australia its vacancy rate sits at just 0.6% while the national vacancy rate is 1.3%. As a result, median asking rents in Adelaide have increased by almost 15% in the past 12 months.

South Australia’s solid performers:

  1. City of Salisbury;
  2. City of Playford;
  3. City of Holdfast Bay;
  4. Mount Barker LGA; and
  5. City of Tea Tree Gully.

City of Salisbury

The region’s largely lower-priced properties have seen excellent long-term growth, with high demand resulting in extremely low vacancy rates and rising rents and rental yields. The combination of affordable prices and strong market activity presents attractive opportunities for entry-level investors.

City of Playford

The Playford LGA in Adelaide’s northern region is a rapidly growing hotspot for property investment. The area’s revitalised economy and affordable housing options are attracting both first-time home buyers and budget-conscious investors. Playford and nearby Salisbury have consistently ranked among the top 10 municipalities in Australia for market activity.

City of Holdfast Bay

The waterfront location of the LGA means its median house prices can be quite high, but its unit market offers affordable waterside options. Median unit prices range from just $479,000 and the majority of its unit markets achieved double-digit median price growth in the past 12 months. Unit yields sit in the 4% to 5% range.

Mount Barker LGA

Affordable housing and new residential developments have attracted many young families and first-time home buyers to the area. The population has grown significantly in recent years, leading to improvements in infrastructure and services. Prices remain lower than Adelaide’s median house price which presents an opportunity for both owner-occupiers and investors, who can benefit from the potential for capital growth and higher rental yields.

City of Tea Tree Gully

Tea Tree Gully offers buyers an affordable, quality lifestyle and good prospects for capital growth. It has suburbs with median house prices in the low to mid $600,000 range within 20 minutes of major employment nodes – including significant business parks in Edinburgh and Mawson Lakes. With extremely low vacancy rates, the LGA is an appealing prospect for investors, and demand for property remains high.

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