Property In Adelaide - Investment

[Angus Smart]

Hey,

Probably the wrong forum, but i am looking at an investment property in RAdelaide! just starting to look about and wondering some suburbs you can suggest?

perhaps with some inferstructure plans and or a nice up and coming area? i've only been to Adelaide once as a kid and all i remember is driving round the f1 circuit.

i probably got about 300,000 max to spend between me and my partner.

[rad100]

i would say best value for money would be around the parafield gardens area..

[Kraft]

I agree maket values here are still on the up...Just sold my place which was built 2 years ago.....

Pleanty of places that would make a great rental.

Parafield Gdns is the way to go...or the general location imo.

[Nightcrawler]

Sorry to tell you, but Adelaide property is NOT an investment at the present time.

Rental yields are an an all time low in Adelaide, since the values of properties have tripled in the past 10 years, yet rental values have not even doubled (many have moved little at all).

Every piece of evidence points to values remaining static for up to 5 years.

There are lots of issues which are IMHO going to cause up to a 5 year pause if not retraction in the Adelaide/Australian market, including (but not limited to) :

- our current Federal Government (which any second now is going to do a Paul Keating style "the recession we had to have" speech)

- rising interest rates (and they WILL rise at least another 50 points by the end of the year)

- instability (in general) in the world causing oil price increases/uncertainty

- little confidence in the continued resource boom/stock market due to our high Aus dollar and subsequent falling exports

- our in inept State Government (which is on its way out next election, but that is sadly still some years off)

- rising electricity/cost of living

- and worst of all the carbon tax (if God forbid it gets up, which it looks like it will), which will result in massive unemployment and massive rises in inflation (which will have to be battled by even further increases in interest rates).

And hopefully I would know, since I am a mortgage security property valuer (with 12 years experience) for the biggest property group in the world.

Sorry to be a ray of sunshine, but you asked for advice.

But honestly if you STILL want to buy here, employ a "buying agent", which I strongly advise anyone, especially when buying interstate. They can advise, and find a property for you to buy within your specifications. An old mate (previous employer in Darwin in fact) of mine Chris Waterman from Waterman and Waterman 0419848544 - tell him Andrew Nuske sent you to him and he will help you out.

[Kraft]

Glass Half Empty.....

Dude we really gotta catch up more often.....

But on a conservitive note i would have to agree with Nightcrawler.

[skylineguy19]

wow andrew, and i always thought you were just full of useless information

thats great info though and unfortunately makes it look like investment properties arent the way to go in the near future, maybe i'll look at upgrading myself to a nicer place in the near future and do the investment property further down the track once/if this country sorts its shit out lol.

[scandyflick]

Don't hold your breath...

[jrm]

Sorry to tell you, but Adelaide property is NOT an investment at the present time.

Rental yields are an an all time low in Adelaide, since the values of properties have tripled in the past 10 years, yet rental values have not even doubled (many have moved little at all).

Every piece of evidence points to values remaining static for up to 5 years.

There are lots of issues which are IMHO going to cause up to a 5 year pause if not retraction in the Adelaide/Australian market, including (but not limited to) :

- our current Federal Government (which any second now is going to do a Paul Keating style "the recession we had to have" speech)

- rising interest rates (and they WILL rise at least another 50 points by the end of the year)

- instability (in general) in the world causing oil price increases/uncertainty

- little confidence in the continued resource boom/stock market due to our high Aus dollar and subsequent falling exports

- our in inept State Government (which is on its way out next election, but that is sadly still some years off)

- rising electricity/cost of living

- and worst of all the carbon tax (if God forbid it gets up, which it looks like it will), which will result in massive unemployment and massive rises in inflation (which will have to be battled by even further increases in interest rates).

And hopefully I would know, since I am a mortgage security property valuer (with 12 years experience) for the biggest property group in the world.

Sorry to be a ray of sunshine, but you asked for advice.

But honestly if you STILL want to buy here, employ a "buying agent", which I strongly advise anyone, especially when buying interstate. They can advise, and find a property for you to buy within your specifications. An old mate (previous employer in Darwin in fact) of mine Chris Waterman from Waterman and Waterman 0419848544 - tell him Andrew Nuske sent you to him and he will help you out.

Geez Andrew - you're making me worry about having just bought a house. Seemed to me with the market as it is, I got it a lot cheaper than I would have a few years ago...

As my existing rental has increased from $350/wk to $420/wk over the past 2 years - I'm just glad to get out of the rental market. What is out there is bloody expensive.

[heslo]

Screw paying 420 a week for a house ill never own. Man I didnt realise how expensive rent had gotten

[jrm]

That's why I bought. Keys in another 9 days ..

[Nightcrawler]

Don't misread what I wrote - LIVING in a property is a completely different matter to investment. You are ALWAYS better off owning your own home, as long as you can service the debt should (when) interest rates rise. The long term picture is what you have to consider. However we are NEVER again going to see boom like we had a few years back - property values just can't double again until wages rise considerably, and given what wages (and affordability) has done in the past 10 years, it looks like being a VERY long time before we see any decent value appreciation.

And you have to remember that whilst $420pw seems expensive, if you bought a $300,000 house with a 100% loan (or $330k house with 90% lend) then interest only payments would be $433pw (but you always have to pay more than that), and THEN you have to factor in property tax, rates and maintenance, which you don't have to pay for when renting.

ALL of my thoughts in the above posts are my OPINION. If you speak to 100 people you will get 100 different opinions. So weigh up the empirical data and please use your own noggin as a filter for my 2c

[Damo_R34]

moral of the story, buy a cheap small house with a big garage, fill it with cars.

[jrm]

Don't misread what I wrote - LIVING in a property is a completely different matter to investment. You are ALWAYS better off owning your own home, as long as you can service the debt should (when) interest rates rise. The long term picture is what you have to consider. However we are NEVER again going to see boom like we had a few years back - property values just can't double again until wages rise considerably, and given what wages (and affordability) has done in the past 10 years, it looks like being a VERY long time before we see any decent value appreciation.

And you have to remember that whilst $420pw seems expensive, if you bought a $300,000 house with a 100% loan (or $330k house with 90% lend) then interest only payments would be $433pw (but you always have to pay more than that), and THEN you have to factor in property tax, rates and maintenance, which you don't have to pay for when renting.

Rent money is dead money - I did the sums on houseloan costs vs renting and it just didnt add up. Given I'm actually ending up with a bigger/better house than I'm renting, and ultimately barely paying any different to what I am now in terms of loan payments. Admittedly, I'll now be up for council rates, water (which my current rental charges me anyway), etc - it still is made up for by owning my own home.

As for garages - damn it was hard to find something in a location I was happy with with a double-garage (not a carport). Also managed to get it with a drive-through out the back - even better. Just a shame the ceilings aren't really high enough for a hoist .. hahaha ..

[MattR]

you could buy my house in roxby:) agree with andrew on all said. if looking for investment maybe think about uni house (corner rundle mall and pultny) one bedders selling for $140k and netting around $14k per year with all fees taken out

[Tangles]

or a beachside suburb. My thought is that Christies Beach will be a good investment.... buy now for that 300k walking distance to beach, 10yrs time will see a 50% rise in value IMO.

[Brezza]

IMO the real bargain's are the houses for more than $300k,

the missus and i have managed to get our house for $40k less than the owner purchased if for only 8 months earlier. adding in stamp duty the owner has lost nearly $70k over the past 8 months.

we found that in the $300-$400k budget there weren't many houses staying on the market, they were getting snapped up quickly. but the ones $550-$600k were dropping every 4 weeks by at least $20k

but i've been looking around the Glenelg, and surrounding suburbs area's

other area's are going to be different.

[Nightcrawler]

You are dead right Brezza.

IMHO one of the biggest drivers of the Adelaide property boom (which began in 2002) was the emergence of savvy load brokers, who quickly realised that the more money you borrow from the bank as a house loan, the more commission they earnt (both up-front and a trailing commission each you you kept your loan with the institution). What we had was every man and his dog going to these home loan brokers and saying "I have found a $250k house and want to buy it - what sort of deal can you get me?" - to which the loan broker replies "nah mate based on your income and (very loose) lenders requirements we can lend you $500k - so go SHOPPING!" - which most people did. This caused the market to rise rapidly with both the first home buyers pushing up the cheap property values due to increased competition, and the people that SHOULD have been buying $250k houses buying $400k-$600k houses.

Of course when the bubble burst and we had 7 x 25 point interest rises in under a year, suddenly all the stupid people who had gone out and purchased homes they could never really afford found out "at 5.5% interest things were just fine, but now they have reached 7.5% I can't afford this loan/house". So what we have seen for the last 3 years or so is an abundance of $400k-$600k homes come on the market and be sold under slight duress scenarios, and those people were then desperate to get back into $250k-$300k properties which they should have bought in the first place. Then the severe watering down of the first home buyers grant at the end of last year reduced demand for even the cheaper homes, so we have the market today - cheap house market is pretty soft, and the $400k-%600k range you get sensational value for money. Obviously the vast majority of people who have homes over $600k aren't hugely affected by the current interest rates, but if it gets much worse that sector of the market will collapse too.

And yes, I have been told many times I should be an ecomomic/property commentator - and I have seriously thought about it. Just can't see how to make money out of it is the only problem.

[Angus Smart]

Wow, thanks for the Discussion, please keep it going!! we're really just starting looking i dont think it will happen for another 6 month or so.. tho may happen earlier, shes getting pushy....

the areas i was looking around were parafield gardens and surrounding, even towards port Adelaide, west lake shores etc.. tho i've really got little idea when it comes to Adelaide.. is out towards the hills a good investment? or down south towards dover gardens etc? (i only know dover gardens as i used to send stock to a shop there.)

we were looking in Sydney but for the money its just not worth it for what you can get down there.. Rental is rather similar. borrow 300, get 280ish a week with a possibility of some big upside. however in sydney borrow 300, and you can possible get 350-400 tho with little property value growth.

It may have been Answered but what are rentals like? are there alot looking? do they get filled in quick?

i've only got upside to the job i am working in (2nd year apprentice) took a paycut to get a better career.. so i'm rather financially stable, however to tell you the truth i'd rather invest 350k into shares than into a house...

[jrm]

Then the severe watering down of the first home buyers grant at the end of last year reduced demand for even the cheaper homes, so we have the market today - cheap house market is pretty soft, and the $400k-%600k range you get sensational value for money. Obviously the vast majority of people who have homes over $600k aren't hugely affected by the current interest rates, but if it gets much worse that sector of the market will collapse too.

When i was looking around, the best value for money seemed to be around the $350-400K. The market seemed to be pretty stagnant there and prices steadily dropping. I was able to get what I think was a fairly reasonable price for what I bought (3 bedroom, master with ensuite/wir, separate lounge, double-garage, pergola out the back, full back to base alarm & ducted aircon).

And yes, I have been told many times I should be an ecomomic/property commentator - and I have seriously thought about it. Just can't see how to make money out of it is the only problem.

I'm always interested to hear what people say about topics like this - feel free to wax lyrical all you like, Andrew - you seem to know your stuff

It may have been Answered but what are rentals like? are there alot looking? do they get filled in quick?

From my very recent experience of the last 5-6 years of renting in Adelaide - it's gotten progressively harder to get an affordable place to live - and the rental prices just keep going up and up. What is out there seems to get snapped up quickly. Not sure if that follows what real estate agents are seeing, or maybe its just the type of properties I like/want ..

[J - Rad]

I'm so excited to buy my first home, but not looking forward to all these rates/fees that just seem to be getting higher and higher while wages are staying the same. They really know how to make it easier for the next generation of first home owners.