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Affordable capital cities the best option for buyers

The cheaper capital cities of Adelaide and Perth continue to attract buyers and have the potential for more capital growth according to an expert.

Hotspotting Director Terry Ryder said both smaller capital cities remain very affordable compared to the larger cities, with prices and volumes holding up well during the recent interest rate hike cycle.

“Over the past 12 to 18 months, when some markets across Australia have been struggling, the ones that have remained buoyant have been those areas where homebuyers and investors can find properties at attainable prices – with rising interest rates making this even more of an imperative,” Mr Ryder said.

“It’s not a coincidence that the capital cities that have remained busy and competitive recently are the cheapest ones – Perth, Adelaide, and Darwin. 

“Equally, the cities where markets dropped the most through this period were the most expensive ones – Sydney, Canberra, and Melbourne.” 

Mr Ryder said there were a number of cheaper locations within the smaller capital cities that were providing good value in the current market.

He said with affordability being a key element of Adelaide’s appeal, the City of Playford has attracted demand as the city’s cheapest precinct – and this has generated strong price growth. 

“Playford has ranked as one of the consistent performers for strong annual growth in dwelling values,” he said. 

“With vacancies so low, rents are strong and above average yields are a big attraction for investors in the Playford LGA, with the Elizabeth suburbs in particular appealing to investors for their yields.”

Mr Ryder said Hillbank, Andrews Farm, Blakeview, Craigmore and Munno Para West also all recorded very strong sales figures in the past 12 months and median house price growth of 15 to 23 per cent and also feature affordable median house prices in the $400,000 to $450,000 range.

He said Salisbury had also been identified as one of the top locations in Adelaide, with buyer demand more than doubling in the past 18 months and house prices in the $400,000 range.

There are eight suburbs in the Salisbury LGA classified as rising markets by Mr Ryder, including Brahma Lodge, Ingle Farm, Para Hills West, Salisbury, Salisbury East, Salisbury North, Salisbury Heights and Valley View.

Hotspotting General Manager Tim Graham said many of Perth’s stand-out municipalities were also at the affordable end of the market, including the City of Canning, which can attribute its popularity to its cluster of affordable suburbs with excellent amenities, green space and train links.

“Many of these locations have median house prices in the $400,000s and $500,000s, but riverfront suburbs like Rossmoyne, Shelley and Riverton are more expensive,” Mr Graham said.

“Most of the City of Canning suburbs recorded moderate to strong growth in their median house prices in 2022.

“With the growth currently being experienced in this precinct, it’s likely these longterm rates will improve in the near future, especially with vacancy rates also remaining very low.”

According to Mr Graham, the City of Armadale also offers good value and boasts a combination of affordability, strong yields and excellent transport links.

He said several suburbs in the Armadale LGA including Brookdale, Camillo, Kelmscott, and Seville Grove have median house prices in the $300,000 to $400,000 range, well below Perth’s median house price and are attracting investor interest.

“Investors seeking strong returns can find rental yields above six per cent in several of the City of Armadale suburbs,” he said.

According to Mr Ryder, there’s a myth among many real estate consumers that you can have good capital growth, or you can have high rental yields, but you can’t have both, so, you have to choose. 

“I believe this is untrue,” he said.

“You can have the best of both worlds by choosing your locations intelligently.”

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.