Best suburbs to invest in Adelaide 2021
As the new year draws closer, it's time to take a look at the 2020 forecast for real estate in Adelaide.
The Australian property market is looking much more promising than the same period twelve months ago. With interest rate cuts from the Reserve Bank, the Coalition's election win and more relaxed lending, the market seems to be bouncing back with more buyer interest.
Buyer activity in Sydney and Melbourne is certainly buoying the market, and this has been felt particularly in the last half of 2019. However, most analysts predict moderate price growth across the board for 2020.
Let's explore how the Adelaide property market performed in 2019, and what forecasters predict is in store for 2020 in the 'City of Churches'.
What did the property market in Adelaide look like in 2019?
According to SQM Research's Boom and Bust Report 2020, the Adelaide real estate market has stalled in 2019. Dwelling values for the 12 months to end October dropped -0.9%. However, Adelaide house prices have risen by 2%, while units fell by -1.5%.
For the past decade, Adelaide property market growth has been pretty flat with just 1.2% growth per annum in the housing market and 0.17% per annum for units. With more tax pressures for investors this year, it's likely investors will stay at bay for at least another 12 months.
However, it's been a better year for landlords with cash flow positive rental yields and even tighter vacancy rates. In October, the lowest vacancy rate posted in Adelaide since 2010 was recorded at a thin 1%.
This has been welcome news for landlords and potential investors, and the Adelaide rental market has responded with a 2.8% increase over the past 12 months. Rents for houses are up 3.4%, while units have risen 4.9%.
The average house price in Adelaide is currently $462,177, while unit median prices are at $323,599.
Adelaide property market forecast 2020
Property forecasters agree that Adelaide will remain stable next year and will experience modest growth.
Domain's Adelaide property market forecast for 2020 is that there will be moderate price growth in the range of 1 to 3% for both houses and units, with an expectation that it will land somewhere around 2.7%.
With home lending seeing less of a decline in South Australia than in other states, Domain reports that this may contribute to a less significant rebound. Other factors contributing to this sentiment include:
- A modest population growth predicted
- A softer job market
- Smaller boost in buyer interest compared to other states
QBE research suggests there will be a 3.4% rise in house prices for 2020, while units will see less action at 0.8%. They believe the median house price should rise to $550,000 by June 2022, which is up 12.3% on September 2019.
"QBE research suggests there will be a 3.4% rise in house prices for 2020, while units will see less growth at 0.8%"
SQM insights show that Adelaide will experience price growth between +1% and +4% across all scenarios:
- The cash rate remains unchanged at 0.75%, the economy recovers, the AUD ranges between US$0.65-$0.75 and no APRA intervention until late 2020.
- The RBA cuts rates to 0.50% by April 2020, the US and China trade war stabilises, the economy stabilises and no APRA intervention.
- The cash rate remains unchanged at 0.75%, the economy recovers, the AUD ranges between US$0.65-$0.75 and APRA intervenes in mid 2020.
The only exception to this forecasted price growth is in the case that the economy weakens and trade talks collapse between the US and China, in which SQM predict a change of -2% to +2%.
NAB Group Chief Economist Alan Oster expects moderate growth of about 4.5% across the capital cities in 2020, however, he forecasts that Adelaide will drop -0.8% next year.
How are Adelaide house prices expected to change in 2020?
Compared to other capital cities, affordability will remain attractive in Adelaide as house prices rise moderately. Once the job market improves and influences interstate migration, we should see a reflection in price growth.
QBE predicts that, "While a dwelling deficiency is expected to re-emerge, it's not expected to be sizeable. The general moderate fundamentals of the Adelaide market are expected to also lead to moderate price growth, averaging 4.1% per annum in the next three years." Most of this price growth is expected to happen toward the end of this period as "dwelling stock is absorbed and the market moves towards undersupply."
According to a Moody's report, the Adelaide housing market remains stable due to more realistic house prices than on the eastern seaboard. They predict a 1.4% rise in house values in 2020 followed by a further bump of 5.1% in 2021. The area of Adelaide South is set to outperform other parts of the city with a 4.1% rise in 2020.
What's the Adelaide apartment market like?
With unit supply making up 38% of the total dwelling supply in Adelaide over the last 12 months, which is up 5% from the decade before, the issue of oversupply is more concentrated in the unit sector. This will keep price growth modest and smaller than for detached dwellings while it's absorbed.
"With unit supply making up 38% of the total dwelling supply in Adelaide over the last 12 months, the issue of oversupply is more concentrated in the unit sector"
QBE projects that there will be price growth of 1.5% per annum for units in Adelaide over the next three years to June 2022, while Moody predicts a 0.8% rise in unit prices for 2020.
Best suburbs to invest in Adelaide
With price growth to remain steady over the next three years and low interest rates available, there will still be plenty of affordability with units and houses for sale in Adelaide.
Suburbs in Adelaide's north and south are projected to have the biggest price growth. If you're looking for an investment property in Adelaide in 2020, then make sure you include these suburbs in your research:
- Gulfview Heights has a median house price of $480,000, which rent out for $393 per week.
- Munno Para has a median house price of $224,000, while the median rent is $310 per week.
- Munno Para West has a median house price of $271,000, while the median rent is $310 per week.
- Greenwith has a median house price of $468,000, with an asking rent of $360 per week.
- Elizabeth Park has very cheap houses for sale in Adelaide with a median house price of $210,000, and an asking rent of $270 per week.
- Torrensville has a median house price of $595,000, while the median rent is $420 per week.
- Panorama has a median house price of $612,000, while the median rent is $425 per week.
- Seacombe Heights has a median price of $530,000, with an asking rent of $370 per week.