Is Adelaide a Good Investment Location? - July 2024

By Guest Blogger, Terry Ryder, founder,

hotspotting.com.au and propertyU

Despite everything that it achieved over the past three years as a property market, Adelaide still has its doubters.

Some still persist with the (outdated) view that Adelaide is a low-growth economy and property market - and that the recent stellar market performance has been an aberration that makes little sense.

The truth is Adelaide has earned its place in the Australian property firmament and it’s here to stay as an out-performer among the nation’s property markets.

The growth of the Adelaide property market, both with prices and with rents, is easier to understand when you realise that real estate markets are local in nature and fundamentally arise out of local economic circumstances.

Now answer me this question? Which of our states and territories, according to CommSec’s State of the State report, is the nation’s No.1 growth economy?

If you’ve been keeping up, you’ll guess that the answer is South Australia. It surprises many people, but SA has been rising up the national rankings in recent years and in the past two quarterly editions, State of the States has found SA to be our leading economy.

It doesn’t surprise us at Hotspotting. We see SA as the leading state for alternative energy development and for high-tech innovation. It’s also a leading economy for education, medical services and research, and energy & resources. It also has a big military economy, including the massive Edinburgh Defence Precinct.

A significant infrastructure spend has been ongoing - including improvements to major road and rail links, expansions of medical and education facilities, and ongoing investment in the Edinburgh Defence Precinct.

It’s a happening place, headed by its capital city, which also offers wonderful value-for-money real estate close to excellent beaches, three nationally-renowned wine districts and a popular hills district which is just 30 minutes from the Adelaide CBD.

No surprise that it’s been one of the big price growth cities - alongside Perth and Brisbane - in the past 12 months, with double-digit growth in median prices for both houses and units (15% for houses and 12% for units, according to PropTrack.

And despite the recent years of price growth, it’s still half the price of Sydney and significantly cheaper than Melbourne, Brisbane and Canberra.

One of the biggest features about the Adelaide market is its vacancy rates. Vacancies are low in most places across Australia, but they’re almost subterranean in Adelaide. It’s been the capital city with consistently the lowest for several years, often closer to zero than to 1%.

Rental growth has been prolific and the northern suburbs have, for several years, offered the cheapest real estate in capital city Australia and the higher rental yields.

Can Adelaide keep rising and rising? Well, nothing lasts forever, and Adelaide is not immune to real estate cycles. But there remains considerable upside in Adelaide real estate because the economy remains strong, prices are still relatively cheap and vacancies show little prospects for rising anywhere near 1%.

And listings of properties for sale continue to fall, putting further upward pressure on prices.

As long as the South Australian economy remains among the nation’s strongest, listings stay scarce and vacancies languish below 1%, we are more likely to see prices and rents rising than falling across the Adelaide market. So the simple answer to the original question is – yes, Adelaide provides some great opportunities for property investors, driven by affordability, infrastructure spend and stable local economy.

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