Thursday, July 10, 2014

Piecing together the full picture

Reflection on last financial year has begun and we have a world of information at our fingertips, particularly in the property investment space. News articles such as 'The Best Suburbs for unit investment', 'Top 50 Growth Suburbs', and 'Houses versus apartments' are appearing everywhere. It's an exciting time for property investors as there's an increasing amount of information and analysis available. It is now even easier to keep up to date with property news and what's happening in the property market.

With the financial year behind us, a number of reports have surfaced. Dissecting this information and comparing what we see day-to-day on the ground has been really interesting. 

RPData have recently released a summary of the financial year and property cycle, which revealed that Australia's capital city dwelling values achieved double digit growth over this financial year with an increase of 10.1%. There's no doubt that it's been a great year for property across the nation.

Locally, when comparing Adelaide's growth of 2.9% over the financial year to Sydney at 15.4% growth and Melbourne at 9.4%, it's interesting to see that on paper Adelaide appears to be underperforming the nation by a significant portion. 

When looking at the current real estate cycle however, the question investors are asking is whether we are underperforming or whether we are merely lagging behind the capital cities and further growth is to come.

When compared to our previous peak, Adelaide's dwelling values are down 1.6% and RPData statistics are telling us we are only 5.6% off the bottom of the trough. This is the lowest increase across the nation and if we look to the outperformer in the market, Sydney has achieved a staggering 23.1% increase from the bottom of the cycle. 

From these figures, South Australia has clearly not experienced the same highs but property analysts are predicting growth to come as we follow suit behind Sydney and the east coast. South Australia has been named as 'the market on the move' and is starting to pick up momentum.

Whilst we don't expect our investors to be achieving the huge upswing as seen in Sydney and Melbourne, there is a silver lining. Adelaide is still extremely affordable. With a median 'dwelling' price of $400,000 (houses at $420,000 and units at $345,000), we are still the most affordable mainland capital city.  

Toop&Toop is focussed on what our property investors should be doing. For our investors, we are looking at options for them to grow their portfolio in the current market. Looking to rental returns, Adelaide is second only to QLD in both houses and unit rental returns, ahead of both Sydney and Melbourne. Achieving 4.3% and 4.9% returns for houses and units respectively, Adelaide provides a great landscape for investors who are looking for long term results.

It's become clear just how essential it is to consider the statistics and figures in context. What we are seeing are positive signs for the Adelaide market – it is still the most affordable and steady market, and rental returns are strong. When you're wading through all the information, it's important to remember that a financial report, newspaper article or group of figures are each only one piece in the puzzle.

From where we sit, Adelaide is looking very promising.

Suzannah Toop

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