WILLIAM
Associate
Key Takeaways –
Nestled in the heart of South Australia, Adelaide, a city known for its economic resilience and steady growth, has emerged as a promising destination for property investment.
The city’s property market has reached unprecedented heights, with the median house price soaring to a record $542,913 [1].
This consistent upward trend underscores the potential that Adelaide, South Australia’s cosmopolitan coastal capital city, holds for investors seeking stable and profitable opportunities.
However, like any investment, understanding the market is key to success.
This guide provides a comprehensive overview of Adelaide’s property market, highlighting its unique attributes and the importance of informed decision-making in property investment.
Whether you’re a seasoned investor or a novice exploring investment possibilities, this guide will offer valuable insights into the dynamic world of the Adelaide property market.
Adelaide’s housing market has consistently demonstrated STABILITY and growth, making it an attractive option for investors.
Historically, the city has shown a steady rise in median prices, even outperforming other major Australian cities regarding affordability and return on investment property.
The current trends in Adelaide’s housing market, including RECORD-HIGH median house prices and a robust growth rate, further underscore its potential for property investment.
Adelaide’s economy plays a significant role in shaping its housing market. The city’s economic stability, even in times of global economic stress, contributes to the resilience of its market.
Adelaide’s economy, which makes up close to 17.7% of South Australia’s economic output, is the LARGEST growth, further enhancing its appeal to investors [2].
Image Source: Realesate.com
In addition to economic stability, Adelaide’s ongoing investment in key infrastructure PROJECTS also impacts property prices.
Projects such as the $24 million upgrade to Victoria Square/Tarntanyangga and the $30 million redevelopment of Rundle Mall not only improve the city’s infrastructure but also create jobs and stimulate economic growth [3].
These developments can increase property demand in and around these areas for home buyers, potentially driving up PROPERTY VALUES and increasing the rental yield.
Investing in Adelaide’s property market offers the potential for stable returns in a growing economy. Understanding these factors can help investors make informed decisions and maximize their investment returns.
In Adelaide’s diverse property market, investors can choose from various investment types. Each type comes with its own set of BENEFITS and challenges. Here, we delve into two popular types of property investment:
A property with positive cash flow means that the property generates more income (usually from rent) than the expenses involved in owning and maintaining the property.
In simpler terms, a property is negatively geared when the expenses of owning and managing it are higher than the money it makes. This loss can be used to reduce the amount of taxable income for the owner.
Financing is a CRUCIAL aspect of any property investment. In Adelaide, investors can finance their property investments, including traditional bank loans, non-bank lenders, and private lending.
As per the Australian Prudential Regulation Authority, as of June 2021, the value of new loan commitments for housing in South Australia was $1.5 billion, indicating a strong demand for property financing [4].
However, borrowing money to invest in property comes with its own set of RISKS and rewards. On the one hand, leveraging borrowed money can potentially amplify your returns if the property appreciates in value.
On the other hand, if the property market declines, you could end up OWING MORE than the property is worth. Therefore, it’s essential for investors to carefully consider their financing options and understand the associated risks and rewards before making a decision.
Choosing the right property is a critical step in the investment process. In Adelaide’s diverse property market, investors MUST consider various factors to identify properties that align with their investment goals. Key factors to consider include:
Investors should also pay CLOSE ATTENTION to median value growth and rental yields, as these are key indicators of a property’s potential return on investment.
Median value growth can indicate the potential for capital appreciation, while rental yields can provide insight into the property’s potential to generate rental income.
We have numerous resources to assist investors in their property search and calculations, including property investment calculators and a friendly team of property investment advisors.
Utilizing these RESOURCES can help investors make informed decisions and identify properties that align with their investment strategy.
Once you’ve secured an investment property in Adelaide, the next step is to decide on the MANAGEMENT of the property. Investors typically have two options: hiring a real estate agent or managing the property themselves.
Real estate agents can handle the day-to-day operations of the property, which can be a significant advantage for many investors.
Managing the property yourself can save on agent fees and allows for direct control over all aspects of the property.
The decision between using a real estate agent or self-managing should be based on the investor’s personal circumstances, including their time availability, proximity to the property, and comfort with handling property management tasks.
In South Australia, property investors need to be aware of several taxes and duties. One of the primary taxes is STAMP DUTY, which is charged on certain documents and transactions.
The rate of Stamp Duty can be either a flat rate or an ad valorem rate (based on the value of the transaction) depending on the specific document or transaction. You can use calculators on the RevenueSA website to estimate the amount of Stamp Duty payable [5].
Another significant tax is LAND TAX, which is levied each financial year and is based on the site value of the land. The rates and thresholds for Land Tax can be found on the RevenueSA website, and they also provide a calculator to estimate your Land Tax.
It’s IMPORTANT to note that the property owner, at midnight on 30th June each year, is liable to pay the Land Tax assessed for the forthcoming financial year.
Investing in Adelaide’s property market offers a wealth of opportunities, thanks to its economic stability and diverse range of investment options.
However, it’s key to understand the various aspects of property investment, from financing and property management to tax considerations. While this guide provides a comprehensive overview, it’s always recommended to seek professional advice tailored to your specific circumstances.
With the right knowledge and guidance, you can navigate Adelaide’s property market confidently and make informed investment decisions.
Sources –
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Associate
Associate Buyers Agent
Administration support
Buyers Agent | Sydney
Buyer’s Agent | QLD
Senior Property Manager/BDM
