To Duncan M. & Adelaideans

From: Ian Parham


'Evening all.

Duncan (and other interested parties)....I enquired today (from Sydney) how a Brock Partners auction of a Public Trustee listed pair of maisonettes, at Edwardstown just off Daws Rd, went on Tuesday.

It was advertised as 'Low Hundred K'...so I thought maybe 115 to 130K perhaps. Well the agent told me that the bulk of bidders dropped out at 140K and it was left to two others to slug their way to 174K!!! I couldn't believe it (I've been away from Adel. for 5yrs).

I know you have posted previously about having lower priced IPs in your portfolio eg Reynella. I was curious if you have dabbled in ex Pub Tr. properties also? I had considered pursuing this avenue in an attempt to get some +pos IPs together...but maybe the Pub Tr properties are getting out of this territory now the 'Agents' are carrying them all??

I would also be interested in your thoughts on Adelaide market currently, particularly Warradale, Oaklands Pk, Marion, Edwardstown, Glandore, Black Forest, Plympton with regard to next growth cycle in however many years time this may be. I did snaffle a copy of the Sunday Mail two weeks ago and scanned through the centre spread lift-out of suburb by suburb growth for the year....very interesting...the likes of Warradle and Daws Pk have followed on from Col Light Gdns etc and gone ballistic.

Anyone with any opinions, thoughts, observations on Adelaide market please hop in with your 2 cents worth!

Regards to all
Cheers Ian
 
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Sim

Administrator
Reply: 1
From: Sim' Hampel


On 11/2/01 7:52:00 PM, Ian Parham wrote:
>'Evening all.
>
>Duncan (and other interested
>parties)....I enquired today
>(from Sydney) how a Brock
>Partners auction of a Public
>Trustee listed pair of
>maisonettes, at Edwardstown
>just off Daws Rd, went on
>Tuesday.
>
>It was advertised as 'Low
>Hundred K'...so I thought
>maybe 115 to 130K perhaps.
>Well the agent told me that
>the bulk of bidders dropped
>out at 140K and it was left to
>two others to slug their way
>to 174K!!! I couldn't believe
>it (I've been away from Adel.
>for 5yrs).

I saw the ad for that place. Doesn't surprise me for Edwardstown. Places were probably dumps too.

>I know you have posted
>previously about having lower
>priced IPs in your portfolio
>eg Reynella. I was curious if
>you have dabbled in ex Pub Tr.
>properties also? I had
>considered pursuing this
>avenue in an attempt to get
>some +pos IPs together...but
>maybe the Pub Tr properties
>are getting out of this
>territory now the 'Agents' are
>carrying them all??

Agents use Public Trustee purely as a marketing strategy these days. Many people (mistakenly) believe that if a property is for sale by public trustee then it is a "will sell no matter what" deal, and a possibility for a bargain. Agents know this and so market the property accordingly.

Unfortunately in such a heated market like Adelaide has been experiencing for the last 12 months or so, there are just too many buyers for such a property to sell at bargain prices. Even with agent lowballing the price to attract attention, just means auctions take longer :(

My advice is don't attempt to concentrate on Public Trustee auctions in search of a bargain (at least not in the current market), you will be wasting your time.

>I would also be interested in
>your thoughts on Adelaide
>market currently, particularly
>Warradale, Oaklands Pk,
>Marion, Edwardstown, Glandore,
>Black Forest, Plympton

The suburbs you listed fall squarely in "my area" (so stay away !) ;-)

I have watched in glee as prices in Colonel Light Gardens have skyrocketted in the last 12 months (we own there) as well as horror as suburbs like Edwardstown and such have followed close behind (damn ! missed out !).

There has been a gentrification process happening in a lot of these suburbs, especially in the suburbs with a significant number of character cottages and bungalows. Unrenovated houses are selling for as much as renovated ones, and Bunnings and Mitre 10 are going a roaring trade.

My mother propogates Australian native plants and sells at some of the plant shows that are held at the Adelaide showgrounds every couple of months. The recent show was incredibly successful, even more so than the same time last year. Apparently when talking to a lot of the people attending the show, many claimed to have just bought a house and were looking to do up the garden a bit.

Now suburbs a bit closer to the city (like Black Forest) are becoming very expensive - much like Forrestville.

Suburbs like Marion and Oaklands Park are a mixed bag. The character homes are selling for ridiculous prices. The rest are only selling at absurd prices.

I've been watching the market in that area closely for quite some time, including several weekend visits to look at property and even a week long visit at the beginning of September.

I came away rather depressed when I attended an auction for a "cute little 2br cottage" in Mitchel Park (just a couple of streets back from the corner of Marion Rd and Daws Rd). It was a small house (about 85m2) on a small block (about 300m2), and was advertised at around $90K. There were upwards of 100 people at the auction and the bidding came down to several 20-somethings with parents in tow looking to secure their first house. I'm sure mum and dad were putting up the deposit money for them too (with a lot of help from the FHOG). The slug-fest ended with one of them paying about $129K for the house.

I have seen similar at other auctions... places where the bidding just doesn't stop. South Plympton, character bungalow in need of LOTS of work, my estimated value $160K, bidding starts at $170K and finished at around $230K.

Basically, because the house prices in Adelaide are relatively low, the First Home Owners Grant has had a huge impact in house prices. In the areas you mentioned, it is virtually impossible to get a decent house for less than $200K now, whereas $150K bought you something decent 12 months ago.

Funnily enough, I haven't seen the upper end of the market move quite as much as the lower end, so there is a lot of choice in the $250K-$350K range closer to the city.

>with regard to next growth cycle in
>however many years time this
>may be.

Umm... now is NOT the time to be buying in these areas. They have moved dramatically already. A lot of that movement was correction for many years of poor growth, fueled by the FHOG and general "gotta buy property" mania. Yes, I think there will be a bit more movement, but I don't think the prices being paid are justifiable right now.

Of course this is only my opinion, and I may be completely wrong !

>I did snaffle a copy
>of the Sunday Mail two weeks
>ago and scanned through the
>centre spread lift-out of
>suburb by suburb growth for
>the year....very
>interesting...the likes of
>Warradle and Daws Pk have
>followed on from Col Light
>Gdns etc and gone ballistic.

Yes they have.

>Anyone with any opinions,
>thoughts, observations on
>Adelaide market please hop in
>with your 2 cents worth!

Interestingly enough, I don't think units have moved anywhere near as much as houses have. Houses are definately still in demand in the inner southern suburbs of Adelaide.

Also note that there has been a lot of small scale development in these areas... due to the huge block sizes and old houses, many have been subdivided for homettes/maisonettes or simply build a second house down the back of an existing one. I think this is one of the reasons units haven't gone as well... there are many low maintenance style dwellings (homettes / maisonettes) that are much more spacious and comfortable than your typical unit.

I'm still buying in Adelaide, but there are very very few bargains to be had in the areas you listed. My opinion is that the market will slow down dramatically within the next 6 months, and we will see some negative corrections in certain areas that have over compensated in their price rises.

My opinion is that if you are prepared to buy and hold long term within 10km of the CBD you should do okay and get maybe 5-7% growth on average. If you want an opinion on anything further out than that (south), you'll need to get Dunc's opinion ;-)

Michele_B's area overlaps with mine a bit (to the north), so if you want opinions on the innermost southern suburbs and the CBD itself, you'll need her! MB ?

 
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Reply: 1.1
From: Ian Parham


G'day Sim.

Mate, what a brilliant post!

For anyone considering Adelaide, you have just read the most comprehensive synopsis of the current SA market you are likely to come across! However, BEWARE...of Sim's, Duncan's and Michelle B's respective territories...which just about leaves bugger all left of metro Adelaide for anyone else ;>)

Thanks Sim...I'm not sure if i'm excited, or thoroughly depressed. Great to finally see the growth...as you quite rightly say...it has been a long time coming. Sadly, it does make it harder to find the little gems that were prevalent not so long ago.

I'm not too hung up on Public trustee props. it was just a case of having thoughtlines of cheaper acquisitions and good yields.

For what it's worth, my view on how much longer things will flourish is that Adelaide may drop off the back of the wave later rather than sooner. I'm probably totally wrong, but although we do follow Sydney and Melbourne, I just get the impression there is enough positive attitude about SA realty to push things on for a bit longer. My property mgr at Barrie Magain Realty (in discussion just yesterday about tenants lease renewal) indicated demand is still stronger than supply...vacancy rate very low still, rents increasing for metro area etc.

It may be that for the first time in many years interstaters may start to pay more than just 'scant regard' to investing there.

Interested in your reference to gentrification....here in Sydney it means restaraunts, sidewalk cafes, and assorted trendy shops. On my last few jaunts to Crowdelaide I didn't pick up on too much of this...although Jetty Rd at Brighton, and certainly the East end of town showed evidence. Perhaps Adelaide is simply seeing the 'older folk' of say Col Light Gdns moving out and the youngsters moving in...cafes or no cafes! So are you on the way in or out Sim? ;>)

If you have a few minutes to put your thinking cap on...how do you see the likes of say Semaphore & Largs Bay (back away from the bluechip 'beachies', Mile End, Thebarton, Croyden, Queenstown...sort of inner west to outer west. My impression is that these areas haven't quite had the appeal of your stomping ground, as such prices are still attractive enough for some of those big old federation homes...perhaps they'll be the growth areas on the next upswing. Or maybe it's time to start heading to Mclaren Vale, Willunga, Aldinga beachside etc for about 8yrs time???

Oh well i'll hop into another glass of '96 Penfolds Bin 389 and quietly sob away :>(

All the best
Cheers Ian
 
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Reply: 1.1.1
From: Michele B


Ian, it's so nice to have someone from Sydney actually notice us to the west!! I regularly thump Michael G with my Adelaide street directory for his derogatory remarks about SA but he claims he never feels a thing!! :)

Agree with Sim's comments - the herd have caught us up and pushed prices to silly levels in some inner-city areas. Rents haven't noticeably kept pace and despite media reports to the contrary, I've found the rental market to be quiet this year on properties which I could practically auction to the highest bidder previously.

There are always good buys around, but in this market they might have to be flushed out by unconventional means. Many of the areas you mention in the innerwest are probably too patchy to consider for the shorter term being largely industrial, but there are still a few nice undiscovered and unspoilt streets of character homes around which might just be the Mile End of the future. West Hindmarsh for example is now attracting attention and even Port Adelaide - one day Port Road might become a leafy boulevard and then we'll all be kicking ourselves for ignoring it for so long!! Could happen - look at Henley Beach and Burbridge Roads. Another place to consider is the Adelaide Hills - prices are starting to move rapidly with the new freeway access and it's a much nicer commute than from the north or south in my opinion. Returns there are still good though demand has slowed a lot due probably to FHOG.

I guess Adelaide is like everywhere else now - you have to work hard to find a good buy and in the meantime research other ways to invest in RE to stay ahead of the herd.

Michele
 
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Reply: 1.1.1.1
From: Duncan M


Wow, never seen such a long, involved and useful discussion on Adelaide! :)

I've come in late, great comments from Sim and Michele

With regards to the southern suburbs we believe they've all had their run,

We got in before the start of the current boom in the southern area, not thru some insightful vision of them having a boom, we just live here and we knew the area well.

We are moving closer to town now with the excess on the rents from the southern areas funding slight loss makers in potentially higher growth areas..

We've just bought in Glenalta, and are looking around Eden Hills, Glenalta and Blackwood for more.. I think these suburbs are undervalued when compared to some of the prices being achieved for similar quality and size properties much further south..

I'm also wondering if the new Blackwood Park could become the next Westlakes/Mawson Lakes?

I'm not sure about other areas, I dont have the time to keep abreast of any more than a handful of suburbs and have no visions of spectacular growth in any particular area.. :)

Regards,

Duncan.
 
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Reply: 1.1.1.1.1
From: Ian Parham


Many thanks Sim, Michele & Duncan!

As a closer Duncan, would you mind putting your thoughts forward on beachside...way down south...Aldinga, Maslins, Silver Sands...re the freeway extension of South Rd. I mean esplanade frontage for some of these areas could still be attractive at around 250K or so. With a view to the long term future when everyone wants out of their new CBD shoebox ;>)

I remember not pursuing espl. frontage at Noarlunga for 75K in 1991....just slap me and call me stupid!

Cheers Ian
 
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Reply: 1.1.1.1.1.1
From: Duncan M


>
>As a closer Duncan, would you
>mind putting your thoughts
>forward on beachside...way
>down south...Aldinga, Maslins,
>Silver Sands...re the freeway
>extension of South Rd. I mean
>esplanade frontage for some of
>these areas could still be
>attractive at around 250K or
>so. With a view to the long
>term future when everyone
>wants out of their new CBD
>shoebox ;>)

A lot of the more southern areas have already skyrocketed.. Seaford Rise etc, some 4Br properties up around the $150K mark, who ever would have thought.

I think Moana is definitely worth a look. Looking even further south, one wonders if even Victor Harbor/Goolwa might be worthy of a look in with all the Seachangers we could expect..

I'm unsure of trying to pick the baby boomers intentions.. I really want growth in the next 4-5yrs, so I'm not trying to second guess that market..

Sorry to be so vague, still learning and relying on averaging into the market not too far from town to ensure long term success.. :)

Regards,

Duncan.
 
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Sim

Administrator
Gentrification

Reply: 1.1.2
From: Sim' Hampel


On 11/3/01 6:27:00 PM, Ian Parham wrote:
>
>BEWARE...of
>Sim's, Duncan's and Michelle
>B's respective
>territories...which just about
>leaves bugger all left of
>metro Adelaide for anyone else
>;>)

Actually... I don't touch anything north of Greenhill Rd. That leaves at least 50% of Adelaide to others ! I'm not greedy ;-)

For those who are interested, the only reason I don't touch anything north of Greenhill Rd. is that I just simply don't have the ability to watch any more areas than I currently do. If I was looking at property full time it would be different.

>Interested in your reference
>to gentrification....here in
>Sydney it means restaraunts,
>sidewalk cafes, and assorted
>trendy shops. On my last few
>jaunts to Crowdelaide I didn't
>pick up on too much of
>this...although Jetty Rd at
>Brighton, and certainly the
>East end of town showed
>evidence.

Yes, there is an element of that. Rundle Street is extremely popular still (frequented by Michele_B I believe !), and King William Rd. (Goodwood/Unley/Hyde Park) is a new cafe hot spot, and there are other areas similar.

But you need to remember that although the immediate streets near these areas certainly do see strong demand, getting from A to B in Adelaide is significantly less demanding than it is in Sydney, as is parking once you get there.

My reference to gentrification was more about what types of houses people want to buy and what they do with them once they have. I'm referring to the rabid buying of old character houses, particularly bungalows and villas where people will renovate, polish up the floorboards, maybe add a room or two out the back and open up that damned enclosed verandah that some idiot decided was a neat idea once upon a time.

It is the home improvers moving into an area and adding value to their houses, changing them from tired old cottages to spunky trendy and very livable cottages. Landscaping the garden and generally improving the feel of an area.

Suburbs such as Daw Park and Edwardstown were only very recently considered working class (lower middle) suburbs. Now there are many young families, reno-dinks, and don't-care-so-long-as-it-has-floorboards types demanding quality in these areas.

There is an interesting phenomenon which several agents have commented on which is the demand for federation look houses or homettes which are newly built. This follows on from my earlier comments about the subdivision and developement that has happened in these areas.

Basically, don't bother building any other style at the moment in these inner southern suburbs... if it ain't old classic character (or new character built to look classic) then don't bother.

>Perhaps Adelaide is
>simply seeing the 'older folk'
>of say Col Light Gdns moving
>out and the youngsters moving
>in...cafes or no cafes!

Well... Colonel Light Gardens has long been regarded as one of the most "tightly held" suburbs in Adelaide, meaning that very few properties ever come on the market. Quite a high percentage of sales that I have witnessed in that area are deceased estates or nanna's-moving-into-a-nursing-home-let's-sell-her-house sales.

Our house we own was built in 1926 (the same time as most in the suburb). Our next door neighbour on one side bought his house new and has lived there ever since. Our other neighbour is a thirty-something couple with a toddler and a new-born (actually, that was three years ago, that toddler has probably just started at Colonel Light Gardens primary school !).

This is typical of the area now, and statistics I have seen (backed up by my own observations) indicate that the average age of residents in the suburb is dropping rapidly as the OHCAKs (Oops-Here-Comes-Another-Kid) move in to replace the older folk who move hostel-ward or heaven-ward.

>So are
>you on the way in or out Sim?
>;>)

Given that we are still (just) 20 somethings with no children, if we do ever manage to move back to Adelaide and our beloved Colonel Light Gardens (which we do hope to one day... "honest mother-in-law-dearest I will be bringing your daughter back home one day soon ! Honest !"), then we will obviously be assisting in the efforts to lower the age statistics a little more ;-)

>If you have a few minutes to
>put your thinking cap on...how
>do you see the likes of say
>Semaphore & Largs Bay (back
>away from the bluechip
>'beachies', Mile End,
>Thebarton, Croyden,
>Queenstown...sort of inner
>west to outer west.

If you haven't seen Mile End in recent years you will be amazed when you do. You remember that toxic waste dump out there behind the rail yards ? Huge sports ground and housing development now ! Lots of action in these regions all out through Thebarton and even as far as Port Adelaide from what little I have seen. Not sure when this all happened, as I haven't really been watching these areas.

>My
>impression is that these areas
>haven't quite had the appeal
>of your stomping ground, as
>such prices are still
>attractive enough for some of
>those big old federation
>homes...perhaps they'll be the
>growth areas on the next
>upswing.

Due to the industrial activities in some of those areas you mention, I believe that there has maybe not been as much growth and activity as there has been in my area. However, close in to the city is in demand, as is close to the beach. If you can find the spots in-between city and beach that are not next door to some industrial area and not on the flight path then you might find some relatively good buys I suspect.

>Or maybe it's time to
>start heading to Mclaren Vale,
>Willunga, Aldinga beachside
>etc for about 8yrs time???

Hmm... personally I consider that these communities will continue to remain essentially seaside townships more than suburbs given that they are just too far out from the CBD and I don't believe that there will be enough growth in Adelaide to sustain the development that far out.

I'm only young though - plenty of time for being wrong yet !

 
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Gentrification

Reply: 1.1.2.1
From: Ian Parham


Thanks for that Sim.

Not much more I can say on all of what you, Michele and Duncan have put forward. Great responses from all of you, very comprehensive and insightful...thanks very much!

I'll be putting this one away in my 'keep' file.

Thanks everyone.
Cheers Ian
 
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Sim

Administrator
More please

Reply: 1.1.2.1.1
From: Sim' Hampel


Come on you other Adelaideans, we've only covered a very small section of Adelaide and heard only a few points of view.

I know there are some lurkers out there who have heaps of experience with investing in Adelaide, so please post your general opinions on the current state of the Adelaide market for us and perhaps some predictions or suggestions on where to from here !

Rodger A. ?
Alan B. ?
Dee ?
anyone ?

 
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More please

Reply: 1.1.2.1.1.1
From: Robert Forward


What you mean there is more to Adelaide then that Sim. It took me longer to read your previous post then to drive around Adelaide.....

Come on mate it is only a small country town after all. hehehehe.

Only joking, as you know. It takes a wee bit longer to drive around Adelaide (well at least another 5 minutes longer) then reading your post.

Cheers
Robert

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1.2.1.1.2
From: Dee Mee


Ok you caught me lurking
The areas I monitor are everything around cbd, and up north east. Dont know much about south, the beach or the semaphore area though.
Here goes. I'll give rough estimates (approx price, rent/wk)
Requirements -ve geared, blue chip growth properties, investment grade areas -parkside (250k, 250),goodwood (280k,250),mile end (260k,230), prospect (250k,240) -3bdrm houses, row cottages, bungalows, character homes near cbd - all have good growth potential, problem is they are all priced too high at the moment, ie they have had recent big growth, and may continue to do so. So look to surrounding suburbs - for the ripple effect in growth, theres hilton, torrensvile, ovingham, bromptom, ridleyton,west hindmarsh, allenby gardens- i believe these suburbs are now feeling the growth wave.
these would be the bluechip buy and holds for solid growth but are typically quite negatively geared if u put a small deposit. In general I'd stay away from units / apartments in adelaide - poor growth, and be careful of townhouses - choose small grouped ones,
directly east of cbd dulwich and gilberton too expensive for IPs.

Now going northeast
major employmt centres - city, and around tea tree plaza, ie along north east road - looking for suburbs in between. Also you have the o'bahn track (bus outdoors on tracks) providing easy transport - so suburbs close to stations in klemzig and modbury are convenient to tennants)
the closer to TTP you get the higher the yield for 3bdrm houses, but less growth. I feel rise in housing prices are still yet to hit these areas. Ie Modbury (140k, 190 rent for a 1980's home). Klemzig, felixtow, marden - good inner city NE suburbs, 1970's homes, with lots of redevelopment for courtyard homes - (200k,200 rent) - will have excellent growth.
Newer areas - oakden 160k 240rent, courtyard homes are in huge demand, prices will rise. This is an odd one out as the rents tennants are willing to pay are huge (out of line with the gradual lowering of rents the further from the city you get)

for reno type properties - look around mile end, klemzig, felixtow, parkside.

the city to beach area-west is growing bigtime - anyone have more info

Ok i think thats enough, dont want to give too much away! Market is very heated so you need to take care. I still dont think prices will fall though.
Anyway just my opinion from only 1yrs research.
 
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Sim

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More please

Reply: 1.1.2.1.1.2.1
From: Sim' Hampel


Fantastic Dee ! Really interesting stuff, thanks.

 
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