Paper Boy
25th May 2008, 05:25 PM
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Majella Corrigan | May 24, 2008
ADELAIDE must still look pretty affordable to investors despite last year's big price growth.
The Real Estate Institute of South Australia's most recent market update notes that, like most places, house price growth is slowing, with Adelaide's median house price now $362,500.
That's just a 2.1 per cent increase for the March quarter, but 19 per cent for the year. Many suburbs had much bigger increases.
Christies Beach, which now has a median price of $374,000, led the pack with a 60 per cent price rise in the year to March. Neighbouring O'Sullivan Beach rose by 42.89 per cent. Its median house price is now $281,500.
There were about a dozen other suburbs with annual rises of between 40 and 52 per cent, with the highest median price among them being $605,000. The report points out that while Adelaide's rental crisis hasn't gone away, a higher vacancy rate for the March quarter is slowly changing the balance.
It's a sign of the times that a vacancy rate of 1.7 per cent can be seen as an easing of the tight rental market, which has become common to nearly all Australia's capital cities.
Rents in most areas have risen by some pretty hefty amounts, in particular in the leafy eastern and southern suburbs.
The suburbs of Belair and Glenalta had rises of almost 26 per cent for the year, while Hyde Park and Unley had rises of nearly 20 per cent.
More affordable suburbs also had substantial increases. Woodville North and Christie Downs jumped 22.2 per cent and 24.3 per cent respectively.
Because the rental increases have been matched by increases in value, new investors will still only get a yield of 4 per cent or 5 per cent, which is similar to many capitals.
They will, however, have shelled out less money for that return than they would in the other capitals.
Valuer Herron Todd White in its May market outlook ran an eye over several suburbs in each capital and assessed what a hypothetical basic three-bedroom, one-bathroom house would return to investors.
In Adelaide it looked at the blue-collar suburb of Elizabeth South, 25km north of the CBD, which it found a reasonable rental prospect with one of the lower levels of entry for investors.
In this suburb its hypothetical home would bring in $200 a week rent, be worth about $225,000 and show a rental return of 4.6 per cent. However, the prospect of further growth isn't as good here as some other suburbs.
One of these is Dover Gardens, 10km south of Adelaide and popular with young people leaving home and with students of nearby Flinders University.
HTW's hypothetical home here would get $320 a week in rent, be worth about $350,000 and show a rental return of 4.8 per cent. The inner-northeastern suburb of St Peters is popular with young professionals because it's close to the CBD and cafe strips. Its entry price is $550,000 and although there are few basic houses like HTW's hypothetical home, broadly comparable properties would return about $450 a week, for a yield of 4.25 per cent.
Like many inner city areas, St Peters' strength as a rental area is more due to its capital growth prospects than the yield.
majellacorrigan@optusnet.com.au
[url]http://www.theaustralian.news.com.au/story/0,25197,23746552-25658,00.html
Majella Corrigan | May 24, 2008
ADELAIDE must still look pretty affordable to investors despite last year's big price growth.
The Real Estate Institute of South Australia's most recent market update notes that, like most places, house price growth is slowing, with Adelaide's median house price now $362,500.
That's just a 2.1 per cent increase for the March quarter, but 19 per cent for the year. Many suburbs had much bigger increases.
Christies Beach, which now has a median price of $374,000, led the pack with a 60 per cent price rise in the year to March. Neighbouring O'Sullivan Beach rose by 42.89 per cent. Its median house price is now $281,500.
There were about a dozen other suburbs with annual rises of between 40 and 52 per cent, with the highest median price among them being $605,000. The report points out that while Adelaide's rental crisis hasn't gone away, a higher vacancy rate for the March quarter is slowly changing the balance.
It's a sign of the times that a vacancy rate of 1.7 per cent can be seen as an easing of the tight rental market, which has become common to nearly all Australia's capital cities.
Rents in most areas have risen by some pretty hefty amounts, in particular in the leafy eastern and southern suburbs.
The suburbs of Belair and Glenalta had rises of almost 26 per cent for the year, while Hyde Park and Unley had rises of nearly 20 per cent.
More affordable suburbs also had substantial increases. Woodville North and Christie Downs jumped 22.2 per cent and 24.3 per cent respectively.
Because the rental increases have been matched by increases in value, new investors will still only get a yield of 4 per cent or 5 per cent, which is similar to many capitals.
They will, however, have shelled out less money for that return than they would in the other capitals.
Valuer Herron Todd White in its May market outlook ran an eye over several suburbs in each capital and assessed what a hypothetical basic three-bedroom, one-bathroom house would return to investors.
In Adelaide it looked at the blue-collar suburb of Elizabeth South, 25km north of the CBD, which it found a reasonable rental prospect with one of the lower levels of entry for investors.
In this suburb its hypothetical home would bring in $200 a week rent, be worth about $225,000 and show a rental return of 4.6 per cent. However, the prospect of further growth isn't as good here as some other suburbs.
One of these is Dover Gardens, 10km south of Adelaide and popular with young people leaving home and with students of nearby Flinders University.
HTW's hypothetical home here would get $320 a week in rent, be worth about $350,000 and show a rental return of 4.8 per cent. The inner-northeastern suburb of St Peters is popular with young professionals because it's close to the CBD and cafe strips. Its entry price is $550,000 and although there are few basic houses like HTW's hypothetical home, broadly comparable properties would return about $450 a week, for a yield of 4.25 per cent.
Like many inner city areas, St Peters' strength as a rental area is more due to its capital growth prospects than the yield.
majellacorrigan@optusnet.com.au
[url]http://www.theaustralian.news.com.au/story/0,25197,23746552-25658,00.html