Adelaide Property Market: The Brewing Property Investment Switch

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Adelaide Real Estate - Investing in the Adelaide Property Market

It’s so dismal to live in Melbourne at the moment.

We’re under an extended lockdown; everyone has to wear a mask. It’s winter: so dark nights and cold weather.

My bin has had more evenings out than I have this year.

Of course, it can’t help but hit the local economy.

And the local property market for that matter.

Property investors are in no rush to get into Melbourne’s market, that’s for sure.

How long the lockdown will be enforced is yet to be seen.

But right now, there’s little hope of any easing.

Sentiment is at an all-time low.

A few weeks ago, when Melbourne seemed to be in control of the virus, Victorian Premier Dan Andrews came under attack for comments regarding South Australia’s border restrictions.

He said:

I don’t want to be offensive to South Australians but why would you want to go there?

Fast-forward to lockdown two and Melburnians have decided they actually wouldn’t mind a bit of SA freedom.

A handful have been caught trying to sneak across the border in recent days.

One even hid in the boot of a car…and is now facing possible imprisonment for the offence!

You’d never have believed such a thing was possible if someone had given you a glimpse of that headline last year.

Assuming this human contraband had successfully sneaked in, they would have done well to check out the local property market.

The Property Market in Adelaide…

Investors often overlook South Australia and the real estate market in Adelaide.

There is some rationale to that.

For the past 10 years it’s been dead.

Dead flat that is.

Prices have gone nowhere. Up just 1.2% per annum for houses and 0.17% pa for units…yawn.

That’s a grand loss for property owners if you take into account holding costs.

But COVID could finally turn things around.

Firstly — agents on the ground are reporting a ‘huge’ rise of interest from Sydneysiders and Melburnians. As well as those overseas.

The inquiry level from both interstate and overseas has been phenomenal,’ reported one agency.

These people are looking for a lifestyle change.

Adelaide is Australia’s second-cheapest capital city after Darwin.

The median house price is just $441,100.

That looks very cheap to anyone in Sydney or Melbourne — and overseas.

But also, rental vacancy rates have been falling. They sit at around 1%.

That’s the lowest vacancy rates since October 2010, according to research house SQM.

It’s not going to change any time soon because there’s no pipeline of stock set to hit the market.

This is especially if population growth ticks up.

Rising rents eventually feed into rising land prices.

They also push renters into buyers.

It makes sense for first home buyers (FBH) to purchase rather than pay money to a landlord with the current rock bottom lending rates — as well as the raft of FHB incentives on offer.

There’s also a record $145 million being poured into infrastructure spending across the state to add to the appeal.

Land prices will inevitably rise in the areas benefitting from this.

But also consider this…

Something that was brought to my attention from one of our Cycles, Trends & Forecasts subscribers…

Approximately 70% of Australia’s copper production comes from SA.

And copper is in high demand in two industries set to boom in the coming years — renewable energy and electric cars.

The Olympic Dam mine in SA produces copper, uranium, gold, and silver. And it’s soon to be the world’s largest.

South Australia also accounts for the majority of Australia’s copper exploration spending.

That will translate into larger reserves, employment, and more money for the government to spend into the local economy.

That’s not to say I’m recommending property investors rush in.

But is it enough for me to take a detailed look at the region and provide some solid property advice to put subscribers of Cycles, Trends & Forecasts ahead of the game?

Sincerely,

Catherine Cashmore Signature

Catherine Cashmore,
For Profit Watch

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