Australia’s big, brash boom-and-bust property markets tend to grab the attention of investors, but quietly consistent Adelaide is now deservedly getting its time in the sun.

New Domain research recently found the city was the only state capital – apart from Hobart – that had not a single suburb where rents fell in the past five years.

Meanwhile, a report from the University of Adelaide’s school of architecture and built environment has just revealed that, of the past two downturns in the economy, prices dipped in Adelaide by only 0.2 per cent in 2012, and then actually rose in 2019 by 0.4 per cent; the only state capital where prices didn’t fall.

“It’s amazing that in one of the worst bust years, Adelaide prices stayed positive, whereas the other capital cities all had drops,” said the report’s author Peter Koulizos, program director of the Master of Property and chairman of the Property Investment Professionals of Australia.

“It’s a very stable market, and COVID-19 has turned it into an even more attractive proposition as so many people are relocating from the bigger cities to the regional areas and smaller capital cities. I spoke to someone the other day whose son worked in Sydney who’s now moved back to Adelaide, working remotely on a Sydney wage but on Adelaide expenses.”

Investors can see the demand for rental homes is now strong, from the vacancy rate that’s been squeezed over the past year from 0.9 per cent to the current 0.6 per cent, on Domain figures.

By the same token, house rents have risen 8.9 per cent over the same period to a record weekly rent of $430, and units are up 9.4 per cent to $350.

But desperate renters are often still prepared to pay more to find a home.

Koulizos has heard of some offering $450 instead of the advertised rent of $420.

Bronte Manuel, sales partner of agency Toop + Toop, is now dealing regularly with large numbers of investors.

“We’re getting significant interest in Adelaide now from investors,” he said.

“Rental prices have never been this strong before and over the past 12 months – because all the figures stack up – we’ve had double or triple the number of investors looking to buy.”

House prices have also grown over the past year by a handsome 16.3 per cent, delivering investors the promise of capital growth too, although units have risen only 2.3 per cent.

At the same time, Adelaide still offers a very affordable proposition for investors with a median house price of $629,728 – the second cheapest of all capital cities behind Perth and less than half of Sydney’s median of $1,410,133 and just 61 per cent of Melbourne’s $1,022,927.

Its unit price is also rock bottom at $337,932.

“We’re now putting all our auctions online and, typically, around half of our properties are being purchased by interstate buyers, whether seen or not,” said Kate Smith, of Harcourts Smith.

“We’re seeing investors buying property at both the more affordable end of the market and the luxury end.

“They see it as a good-value proposition across the whole range.”

Sue Williams, Domain, 25 August 2021
https://www.domain.com.au/news/why-property-investors-are-finally-waking-up-to-charms-of-adelaide-1078993/