Adelaide Property Market Update February 2020

To understand where we are going, we need to know where we have been.

During the middle part of 2019, the historically slow winter period was compounded by the federal election and lingering effects of the banking royal commission. The metropolitan market slowed with both state government and CoreLogic supplied data indicating a declining market. Historically the South Australian market has lagged behind Sydney and Melbourne which both began to show signs of recovery in mid 2019. On the back of this data it was hopefully only a matter of time before the tides turned. And turned they have. The most recent CoreLogic Daily Home Value Index indicates that the metropolitan market has recovered to a point of 117.06 from a low of 114.99 in September 2019.

This market fluctuation has been supported by agents who have reported that the middle part of 2019 saw a reduction in buyer activity and also a limited amount of available stock, only for market conditions to flip come spring.

So, with this being said and no known market disruptors on the horizon, there is no reason to indicate that this strengthening level of market activity won’t continue into 2020.

Market segments to watch throughout the year will be the middle ring $400,000 to $600,000, entry level character dwellings and the prestige market of $3 million plus.

The middle ring provides affordability for first home buyers and also a price point for cashed up investors who do not have to rely solely on a lending institution. Fitting this profile are the suburbs of Felixstow, Seaton and Pasadena.

Felixstow is located seven kilometres north-east of the Adelaide CBD. This suburb was established in the 1960s with further development occurring in the late 1990s. The suburb is currently going through a stage of urban renewal with a significant amount of older stock being demolished. Felixstow has proximity to Linear Park, is serviced by Marden Shopping Centre and has direct access to the CBD via Payneham Road and the O-Bhan bus route. Zoning changes in 2017 allowing for higher density development saw the suburb’s median house price spike to $685,000. This has since cooled off to a median dwelling price of $598,888 as at September 2019. Representing Felixstow’s past and present are the sales of 32 Wilson Avenue, an original 1960s brick dwelling on 1000 square metres and 11 Pearce Avenue, a circa 1993 threebedroom, two-bathroom brick veneer dwelling on 380 square metres, which achieved sale prices of $574,500 and $571,000 respectively.

Seaton is located 11 kilometres north-west of the Adelaide CBD. This suburb was established in the 1950s and has since gone through a number of stages of urban renewal with a mixture of newer 1980s to 2000s dwellings. The suburb has proximity to Grange Beach, is serviced by Westfield West Lakes and has The Royal Adelaide Golf Club within its confines. This suburb has seen its median sale price steadily rise since mid-2015 and has a current median dwelling price of $495,000. Older stock in Seaton is considered most popular, providing purchasers with the greatest potential to value add. Recent sales in this category are 39 Seaton Terrace and 7 Stevens Street, both comprising partly updated 1960s brick dwellings on large allotments and achieving sale prices of $508,000 and $460,000 respectively.

Pasadena is located nine kilometres south of the Adelaide CBD. This suburb was established in the 1970s and is characterised by large brick homes on 700 square metre allotments. A large portion of Pasadena extends into the Adelaide foothills, which provides many properties with local views and has restricted higher density development. The epitome of this is the recent sale of 85 Quinton Court, which achieved a sale price of $585,000 in December. This is a two level brick dwelling disposed as three bedrooms and two bathrooms with local views and situated on an 820 square metre allotment. Pasadena has a direct route to the CBD via Goodwood Road and is located only a short distance from the Southern Expressway, which provides access to the Fleurieu Peninsula. Pasadena has a median dwelling price of $566,250, some 15% below the median dwelling price of the greater Mitcham Council.

With a buyer pool as deep as a baritone, entry level character dwellings continue to be the most popular property type within the inner and middle rings. Irrelevant of condition, there is upside in these properties for those looking to renovate, whilst the comfortable and renovated properties provide options for first home buyers and downsizers. The entry price point varies depending on location. North and west of the CBD sees an entry price point of $500,000 to $700,000, whilst $600,000 to $800,000 represents the entry price point south and east of the CBD. Prospect (north), Mile End (west), Goodwood (south) and Kensington (east) of the CBD provide the best chances of picking up an entry level character dwelling.

The prestige market of $3-million-plus offers purchasers a significant slice of house and land compared to a number of the other metropolitan markets. Buyer activity has come locally as well as from interstate and overseas. Within the inner ring, 1900s character mansions on larger land holdings are considered most popular whilst west of the city, properties require a high standard of finish and ocean views to push the value past $3 million. A number of suburbs achieved significant top end sales in the latter stages of 2019. The inner southeastern suburb of Fullarton had its first sale above $2.5 million when 137 Wattle Street settled for $3 million in November. West of the city, Glenelg North achieved only its highest transaction since 2012 with 10 Patawolanga Frontage achieving $4.04 million in December. East of the city, Kensington Park achieved only its second sale above $4 million with 56 Yeronga Avenue settling at $4.2 million in December. Ironically, Kensington Park’s only previous sale above $4 million was 56 Yeronga Avenue which achieved $4.25 million in 2013.

For those looking for capital growth, the CBD apartment market and outer ring should be treated with caution. Both these market segments have heightened levels of available stock, which creates a dynamic that isn’t conducive to an increasing market.

We don’t claim to be able to tell the future but with data indicating a strengthening finish to 2019 and positive feedback from agents, the metropolitan market is in a position to enter the new decade on a positive note. Whether this trend continues can only be answered by the clairvoyants among us.

Speak with an Adelaide Mortgage Broker today.