Adelaide suburban equivalents

[hobo-jo]

The only thing I think it has going for it is that its cheap compared to the other capitals...and its cheap for a reason. I cant see strong and sustained price growth in Adelaide. You will most likely be looking at a very average/low growth and that too for short periods of time.

Adelaide seems cheap when you look at nominal prices, but when you compare yields Adelaide is around middle of the pack:

http://blog.residex.com.au/wp-content/uploads/2014/07/Table-1-June-Property-Market-Results1.jpg

I agree with your sentiment, I think Adelaide residential property still has a low price growth ahead in the short to medium term, maybe even another price downturn after this cyclical bounce.

We've got the second highest unemployment rate in the country.

Olympic Dam expansion postponed.

Ship building future is uncertain.

Holdens and related manufacturers closing up in next couple of years.

Office vacancies in the CBD are climbing.

State Government handing down a budget that is not as generous as they'd promised.

Economically things aren't looking great.

I'm hoping the property market rolls over again for some better buying in around 2 years (maybe doom and gloom will peak as Holdens shuts, unemployment peaks, etc).

 

[hobo-jo]

Holdens closure may come early:

http://www.macrobusiness.com.au/2014/08/car-industry-threatens-early-close/

The commission?s modelling of the worst case scenario after the end of production by Ford, GM Holden and Toyota in the period 2016-17, has predicted that 27,430 jobs would be lost in Victoria and 10,670 in South Australia.

http://www.theguardian.com/world/2014/mar/07/end-car-manufacturing-could-cost-39000-jobs

By my rough calculations that would add around 1.3% to the unemployment rate for the state or otherwise add them to the growing number of underemployed.

 

[eKwatee]

However there is still plenty of business activity going up in the North of Adelaide to provide jobs to these people. I know the media hype is normally about closures and job losses, but what about the companies hiring between now and by the time Holden's closes.

A couple of examples.

Liebherr just spent $65 million constructing a manufacturing plant, creating up to 180 jobs. and just around the corner another $65 million distribution centre on the old Bridgestone site in Salisbury South. Not far from there the planned entertainment complex on the corner of Main North Road and Kings Road.

Salisbury Council approved $225.6 million in developments over 2013-14 up 54% from the previous year and Playford Council approvals up slightly to $189 million up from $173 million.

There's many more projects I could also mention up the North when I get a chance.

I completely understand jobs will be lost when Holden's closes, but it's not all doom and gloom up here.

 

[hobo-jo]

it's not all doom and gloom up here.

Agree and wasn't targeting the north specifically. Just pointing out SA/Adelaide has some economic realities to overcome before we will see a return to strong property price growth (in my opinion).

SA is also facing a low population growth rate:

http://www.macrobusiness.com.au/2014/06/mining-states-drive-falling-population-growth/

I would be interested in hearing anyone's argument for strong price growth, other than "Melbourne/Sydney have experienced a strong upswing, so should Adelaide"...

 

[see_change]

Agree and wasn't targeting the north specifically. Just pointing out SA/Adelaide has some economic realities to overcome before we will see a return to strong property price growth (in my opinion).

SA is also facing a low population growth rate:

http://www.macrobusiness.com.au/2014/06/mining-states-drive-falling-population-growth/

I would be interested in hearing anyone's argument for strong price growth, other than "Melbourne/Sydney have experienced a strong upswing, so should Adelaide"...

Not sure about strong growth , I don't think you can ever accurately predict the strength of growth , but I'm happy to go with the sydney and melbourne have moved therefore .......

Certainly any research I've done in the past has supported the concept of markets following each other and on two occasions in the past I've been strongly advised not to invest in markets because of poor population growth and fundamentals. Search " rocky the next big thing " for my post about rockhamptom and the other place was tassie in early 2000's . Both doubled in a reasonably short period despite their poor fundamentals .

The only time I'm wary about fundamentals are in places I wouldn't invest in anyway , small rural towns , mining towns etc.

There are plenty of people who will chase returns in poor areas . From that perspective with the relatively early growth in mt Druitt ( which normally follows sydney ) then everyone should be knocking down the door in Elizabeth but I'm wanting to get a better feel of the Adelaide market at this stage . We're still months away from our next purchase and I'm considering different options

Cliff

 

[D.T.]

Holdens and related manufacturers closing up in next couple of years.

I like how you mentioned this twice in your post like it has some importance.

• They have 1000 staff in a 1.8mil population city. A drop in the ocean.
• They very unprofitable business in a very unprofitable industry and have to be topped up by govt.
• The related vendors/suppliers etc have already recontacted their services elsewhere.
• The staff are getting nice payouts, in my relatives case, enough to retire on.
• Auto parts/service industry still exists because people still have cars that need servicing and repairing. This doesn't change based on whether the car is manufactured here or elsewhere.

I'd say that's a plus not a minus!

 

[hobo-jo]

I like how you mentioned this twice in your post like it has some importance.

• They have 1000 staff in a 1.8mil population city. A drop in the ocean.

Only mentioned twice due to a news story the next day reporting closure may come sooner.

As per links in earlier post, there will be a larger impact due to automotive industry closing on a larger scale (Holdens / Toyota / Ford), the impact to SA will be far higher than 1,000 jobs.

Adelaide's population is closer to 1.3m. Not every citizen in a city works.

I've had relatives receive payouts from Holden in the past too, often substantial, but they don't always last for very long.

 

[Brady]

Agree and wasn't targeting the north specifically. Just pointing out SA/Adelaide has some economic realities to overcome before we will see a return to strong property price growth (in my opinion).

SA is also facing a low population growth rate:

http://www.macrobusiness.com.au/2014/06/mining-states-drive-falling-population-growth/

I would be interested in hearing anyone's argument for strong price growth, other than "Melbourne/Sydney have experienced a strong upswing, so should Adelaide"...

Has SA ever had anything except a low population growth?

Looks like SA tracks pretty closely with the national

 

[see_change]

Just realized something about the chart .

Sigh .......

Again , tassie misses out . No wonder SA is at the bottom , though not much worse than NSW . Another place you shouldn't invest in .

But at least SA is growing . When I invested in tassie it was shrinking .

Cliff

 

[ToGetProperty]

Hi, See_Change and all:
Honestly, my IP knowledge is from this forum. I have no problem to share my IP details in Adelaide with everyone as well as the decisions behind it.

My background:
Firstly, I have 10 IPs (houses and many of them having development potential) in Sydney with heavy land tax.

So, I move to Brisbane to buy 4 houses with one in Salisbury with land area of 956 square meters. So, I don't need to pay land tax with my wife holding two and I have two.

In any major city, if the area having 5 years down time, the risk to buy in this area is much lower than the last 5 years.
Now, Adelaide property market is down for 5 years and its property yearly growth is similar to other cities. And it is (will be) free to hold (good return) on the properties with good tenants. I hate to buy into areas like Mt Druid which I have so much head with one property before. Please note that many people are successful in buying those areas with their special skills or local knowledge.

There are some limitations on my interstate buying:
I am more conservative such as requiring low maintenance.
I don't bother development potential in Adelaide as it is simple too cheap. Why bother to rebuild?
With so many properties on my holding, good rental return is the key for my Adelaide's purchase.
I always like to buy houses as well in the reasonable areas with good tenants.
I have my own management agent to inspect or give my second opinions on every decision.
And I know I will always pay a little more in the prices as I can't afford to fly there many times.

Finally, I haven't been Adelaide before. So, please discount my contribution here.

The properties I bought over there are

41 Winnerah road, Christies beach - A$282K - A$280/week. -> I would like to retire in this house within 10 minutes walking distance to the beach.
Actually, I missed one house in Hackam West of "A$225K/A$270week" while I fly there. So, I decide to buy this little blue chip house instead. There were few offers at the similar prices at that time.

22 Osmund St, Christie downs - A$225K - A$280/week. -> good return
No competition at all in open market on this house for 2 weeks.

9 Lutana Ct, Morphett Vale - A$248.5K - A$280/week
This one was't in the open market at all and I don't bother to fly over to inspect it.
However, there are some facts in the history of this property (can't remember the exact details):
1. The last owner was paying about A$75K, for around 15 years. Can you see the capital growth here?
2. The tenants lives there for something 10 years. It means the house must be good.
3. The rent was about A$160/week at 7 years ago. Rental increase is healthy too.

4 months passed after purchased them, I have no issues with all tenants. Every fee is half price, comparing to Sydney, from water rate, council fees and insurance fees.

Actually, no issues in Brisbane's ones and Sydney's ones as well.

I just feel Adelaide market is still depressed without to much competition. That is what I like the most in buying.

Only God will know when Adelaide market will move. However, within 10 years, I believe Adelaide market is much higher than today. With rental increase, it is free or will be free to hold them.

 

[wll6568]

Hi, See_Change and all:
Honestly, my IP knowledge is from this forum. I have no problem to share my IP details in Adelaide with everyone as well as the decisions behind it.

My background:
Firstly, I have 10 IPs (houses and many of them having development potential) in Sydney with heavy land tax.

So, I move to Brisbane to buy 4 houses with one in Salisbury with land area of 956 square meters. So, I don't need to pay land tax with my wife holding two and I have two.

In any major city, if the area having 5 years down time, the risk to buy in this area is much lower than the last 5 years.
Now, Adelaide property market is down for 5 years and its property yearly growth is similar to other cities. And it is (will be) free to hold (good return) on the properties with good tenants. I hate to buy into areas like Mt Druid which I have so much head with one property before. Please note that many people are successful in buying those areas with their special skills or local knowledge.

There are some limitations on my interstate buying:
I am more conservative such as requiring low maintenance.
I don't bother development potential in Adelaide as it is simple too cheap. Why bother to rebuild?
With so many properties on my holding, good rental return is the key for my Adelaide's purchase.
I always like to buy houses as well in the reasonable areas with good tenants.
I have my own management agent to inspect or give my second opinions on every decision.
And I know I will always pay a little more in the prices as I can't afford to fly there many times.

Finally, I haven't been Adelaide before. So, please discount my contribution here.

The properties I bought over there are

41 Winnerah road, Christies beach - A$282K - A$280/week. -> I would like to retire in this house within 10 minutes walking distance to the beach.
Actually, I missed one house in Hackam West of "A$225K/A$270week" while I fly there. So, I decide to buy this little blue chip house instead. There were few offers at the similar prices at that time.

22 Osmund St, Christie downs - A$225K - A$280/week. -> good return
No competition at all in open market on this house for 2 weeks.

9 Lutana Ct, Morphett Vale - A$248.5K - A$280/week
This one was't in the open market at all and I don't bother to fly over to inspect it.
However, there are some facts in the history of this property (can't remember the exact details):
1. The last owner was paying about A$75K, for around 15 years. Can you see the capital growth here?
2. The tenants lives there for something 10 years. It means the house must be good.
3. The rent was about A$160/week at 7 years ago. Rental increase is healthy too.

4 months passed after purchased them, I have no issues with all tenants. Every fee is half price, comparing to Sydney, from water rate, council fees and insurance fees.

Actually, no issues in Brisbane's ones and Sydney's ones as well.

I just feel Adelaide market is still depressed without to much competition. That is what I like the most in buying.

Only God will know when Adelaide market will move. However, within 10 years, I believe Adelaide market is much higher than today. With rental increase, it is free or will be free to hold them.

Very well piece of say

 

[Swearengen]

I like how you mentioned this twice in your post like it has some importance.

• They have 1000 staff in a 1.8mil population city. A drop in the ocean.
• They very unprofitable business in a very unprofitable industry and have to be topped up by govt.
• The related vendors/suppliers etc have already recontacted their services elsewhere.
• The staff are getting nice payouts, in my relatives case, enough to retire on.
• Auto parts/service industry still exists because people still have cars that need servicing and repairing. This doesn't change based on whether the car is manufactured here or elsewhere.

I'd say that's a plus not a minus!

Ah I don't think you get it, if the car manufacturers aren't competitive do you really think local part manufacturers (which is where most of the jobs are) can compete? Do you think the offshore manufacturers are going to import parts from Australia? As it is, a ten dollar part for my Prado (a cover for the parking sensor) comes from Japan.

 

[D.T.]

Ah I don't think you get it, if the car manufacturers aren't competitive do you really think local part manufacturers (which is where most of the jobs are) can compete? Do you think the offshore manufacturers are going to import parts from Australia? As it is, a ten dollar part for my Prado (a cover for the parking sensor) comes from Japan.

Relevance please?
Who's going to fit the part for you, someone in japan too?

 

[Brady]

Togetproperty what size blocks did you buy down south?

A dont mind the areas you bought in, although you say you're not keen on Adelaide for development. I hope you still bought big blocks, as when the prices increase down there it will make development profitable.

And there are definitely parts of Adelaide that are profitable to develop now but believe you need to be inside 10-20km to the city.

I think the key to buying in Adelaide is still having that development potential.

 

[Joeyv]

I agree always look for something that can be developed in years to come that's where the value is

 

[hobo-jo]

Relevance please?
Who's going to fit the part for you, someone in japan too?

You started with the irrelevance D.T. when branching off into auto service businesses when my post clearly stated "Holdens and related manufacturers". I was talking about parts manufacturers to begin with.

In any major city, if the area having 5 years down time, the risk to buy in this area is much lower than the last 5 years.
Now, Adelaide property market is down for 5 years and its property yearly growth is similar to other cities. And it is (will be) free to hold (good return) on the properties with good tenants. I hate to buy into areas like Mt Druid which I have so much head with one property before. Please note that many people are successful in buying those areas with their special skills or local knowledge.

This is a fair point, both Sydney and Perth took off after 5-6 year lulls (no nominal price gains from peak) as Adelaide is now close to having. However, I think there is another couple of years to go, economically both Sydney and Perth were in a much better position before the cycle higher.

I've never been to Mount Druitt for comparison, but none of the suburbs you've purchased in would be considered 'blue chip' for Adelaide, they are all 'cheap' suburbs (not that there's a problem with that, but wouldn't bank on having no tenant issues in the future).

 

[D.T.]

You started with the irrelevance D.T. when branching off into auto service businesses when my post clearly stated "Holdens and related manufacturers". I was talking about parts manufacturers to begin with.

But the related parts aren't in Adelaide anyway so what you're saying doesn't change anything.

 

[hobo-jo]

But the related parts aren't in Adelaide anyway so what you're saying doesn't change anything.

All I know is that the PC has outlined far more automotive manufacturing jobs (circa 5000+) that are at risk in SA, not just those held directly with Holdens.

http://www.pc.gov.au/projects/inquiry/automotive/position

If you've seen reports that show only 1000 jobs will be lost in SA as a result of the automotive manufacturing closures then would be interested in seeing it.

 

[see_change]

Hobo-jo

You seem to specialise in coming into threads where some one has asked a question , people are answering the question , then you come in and say why people shouldn't invest or invest in that area .

That wasn't the initial question.

Do you have any thing constructive to add or is your sense of achievement only fulfilled by negativity ?

Cliff

 

[hobo-jo]

This is a discussion forum see_change, my comments have been in response to others in the thread.

If you aren't interested in hearing discussion from multiple points of view then maybe find yourself an echo chamber.