SouthAustraliaProperty Report – July 2014

2

South Australia – Property ReportJuly 2014

National Overview

Upgraders seize opportunities

The past 12 months have provided an abundance of opportunities for upgraders to climb the property ladder. Interest rates are at record lows, rising values have boosted home equity, and many Australians are trading up to larger homes or more desirable locations, or are achieving lifestyle aspirations such as moving to acreages or beachside locations.This quarter, Herron Todd White valuers around the nation identified those areas where upgraders are buying, and which locations can give buyers the best of both worlds – decent capital growth and a quality lifestyle.

PROXIMITY TO SCHOOLS AND FACILITIES IS A KEY DRIVERFor many upgraders, the decision to move is based on meeting the needs of a growing family, and consequently, family-friendly suburbs have been the key beneficiaries of upgrader activity.

In Brisbane upgraders are attracted to middle-ring suburbs – like Grange, Newmarket, Ashgrove, Coorparoo and Camp Hill – located 5-10 kilometres from the CBD. Here, family homes start in price at around $600,000. In Sydney, the Hills District offers ideal family living with quality homes and plentiful local facilities – and as a bonus, capital growth is virtually assured with the construction of the Norwest rail line, due for completion in 2019.

The same preference for family living is driving upgrader activity in Darwin. Notably, the northern suburbs of Nightcliff, Rapid Creek and Jingili offer larger homes on generous blocks with the extra appeal of quality local schools.

In Tasmania, upgraders are heading to areas where character homes are available. Many of Hobart’s inner suburbs such as Sandy Bay and Battery Point have benefited from this trend.

Despite property values rising steadily across many Australian property markets, there are still areas where prices are below previous peaks....

3

South Australia – Property ReportJuly 2014

A CHANCE TO GET MORE BANG FOR THE UPGRADE BUCKDespite property values rising steadily across many Australian property markets, there are still areas where prices are below previous peaks, and this is allowing upgraders to enjoy more bang for their buck. On Queensland’s Gold Coast, for example, beachfront homes in Mermaid Beach are priced around $3 million – a far cry from the price tags of up to $12 million seen in 2007.

In Perth, the riverside suburb of Victoria Park is becoming a sought-after address among upgraders. Despite close proximity to the CBD, Victoria Park is cheap relative to similar neighbouring suburbs and this should also underpin future value growth.

INNER-CITY LIVING HOLDS APPEALReflecting the trend towards near-city living, inner-city suburbs are also attracting upgrader interest. In Melbourne, Fitzroy North offers a thriving cafe and restaurant scene, and as demand surges in neighbouring suburbs, capital growth in Fitzroy North is expected to be healthy over the long term. In Adelaide, Bowden is undergoing significant urban renewal and the gentrification of surrounding suburbs should also underpin growth in this area.

With so many opportunities available to achieve your personal property goals, I invite would-be ugraders to take a look through our state-by-state reports to discover the suburbs of choice for other upgraders, plus a guide for what you can expect to pay for your next home.

Brendon HulcombeCEO - HERRON TODD WHITE

Despite close proximity to the CBD, Victoria Park is cheap relative to similar neighbouring suburbs and this should also underpin future value growth.

4

South Australia – Property ReportJuly 2014

South Australia

AdelaideINNER SUBURBS REMAIN DESIRABLEThe most desirable locations for upgraders at present tend to be Adelaide’s inner suburbs and beachside locations.

In particular, the eastern locations of Norwood and Dulwich are attracting upgrader interest, while to the south, Parkside, Wayville and adjacent suburbs within 5 kilometres of the CBD are popular with those climbing the property ladder. In the city’s inner northern suburbs, Bowden is gaining traction among upgraders.

These inner-city suburbs are regarded as desirable because of their easy access to the city coupled with good choices of private and public schools and all the other services and facilities that older, established suburbs tend to offer.

In addition to the visual appeal of these green, leafy suburbs, many feature popular local shopping, dining and entertaining precincts. The inner east, for instance, boasts Norwood Parade and Burnside Village, while the inner south has King William Road and Unley Road.

BOWDEN – UNIQUE URBAN RENEWALTo Adelaide’s north, Bowden is undergoing significant redevelopment from an industrial area to a modern, transport-oriented development. Since the state government body Renewal SA acquired the 16.3-hectare site, Bowden has steadily been transformed into a vibrant inner-city destination and will ultimately provide homes for 3,500 people with commuting options including tram and train access into the city plus bicycle ways.

As well as appealing to upgraders, Bowden may offer greater opportunities for capital growth than the already highly developed areas of the inner east and inner south. Surrounding residential areas are also undergoing significant gentrification and will benefit from improved infrastructure.

THE LIFESTYLE APPEAL OF BEACHSIDE SUBURBS Adelaide’s beachside suburbs of Brighton, Glenelg, West Beach, Henley Beach and Grange are also attracting upgrader interest.

Along with proximity to Adelaide’s popular and safe swimming beaches and a pleasant beachside lifestyle, these are all older, established suburbs with an extensive selection of services and facilities. There is a good range of local shopping, dining and entertaining options, most notably around Jetty Road at Glenelg and Henley Square.

5

South Australia – Property ReportJuly 2014

Among the locations noted, there tends to be a limited volume of properties listed for sale, and with the passage of time there are fewer opportunities to pick up bargain properties in the lower price range – a reflection of ongoing upgrading and redevelopment activity. Property tends to be fairly tightly held within these suburbs, with owners often choosing to improve their properties rather than selling.

PRICES FROM $450,000Upgraders can currently expect to pay around $450,000-plus for 2-bedroom apartments or townhouses, though at the lower end of the market, owner-occupiers are competing with investors and this can increase competition for particular properties.

Fully renovated and/or extended detached dwellings or newly built maisonettes and townhouses often fall into the prestige property category. A standard 3-bedroom home may be priced from $750,000-plus, with the price rising to upwards of $1 million for a prestige home.

CAPITAL GROWTH TENDS TO BE STEADY RATHER THAN SPECTACULAROverall Adelaide’s property market is traditionally very steady, providing solid rather than spectacular growth. The flipside is that there tends to be no significant downturns either.

Capital growth in Adelaide has broadly been around 50% in total over the past 10 years, with the bulk of these gains occurring between 2004 and 2010 followed by a downturn from 2010 to 2012.

The market has been slowly recovering since 2012 and has recently returned to sit slightly above the previous peak of 2010.

It is worth noting increases in capital value are not consistent across all properties and locations; however, inner-city and beachside suburbs have historically delivered solid capital growth in the long term. This explains why these locations are often regarded as Adelaide’s blue-chip locations. We believe that over the next 2 years capital growth could be around 10%.

It is worth noting increases in capital value are not consistent across all properties and locations; however, inner-city and beachside suburbs have historically delivered solid capital growth in the long term.

Telephone 1300 880 489admin@htw.com.auhtw.com.au

Local expertise. National strength. Trusted solutions.Herron Todd White is Australia’s leading property valuatiuon and advisory group. For more than 45 years, we’ve given our customers peace of mind and the confidence to make good-decisions for their vital property investments. Whether you are buying or selling, expert independent advice is the smartest property investment you can make.

Liability limited by a scheme approved under Professional Standards Legislation. The scheme does not apply within Tasmania.