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South Australia’s top performed locations likely to see more growth

The South Australian property market has defied the national downturn, with a host of well performing suburbs set for more growth, according to new figures.

In its latest whitepaper, buyer’s agency InvestorKit said the South Australian property market was a stand-out, with five locations performing exceptionally well, including Barossa, Mount Gambier, Tea Tree Gully, Onkaparinga and Adelaide Hills. 

InvestorKit Head of Research and founder Arjun Paliwal said the five regions had strong fundamentals and are expected to outperform this year.

He said Barossa, which is located 75km north-east of Adelaide, has been a strong performer due to its relative affordability.

“Although the sales volume is slowly trending down and the price is not growing as fast as last year, we do not see its growth stopping anytime soon considering the high market pressure and affordability,” Mr Paliwal said.

“It has had an increase of 13.5 per cent over the past 12 months, and in the past 10 years, the median house price has increased by 47.8 per cent.

“With only 16 per cent of properties in Barossa as rentals, the strong owner-occupancy has led to an extremely tight rental market in recent years, with the vacancy rate hovering around 0.1 per cent.”

Mr Paliwal said rent levels had surged due to the rental crisis, keeping rental yields at a healthy 4.5 per cent.

According to Mr Paliwal, Mount Gambier, the second largest city in South Australia, is another top performer, helped by it being the centre of a large transport industry. 

“Its median house price started surging in early 2022 and is currently sitting at an affordable level of $380,000,” he said.

“It has increased 26.7 per cent over the last 12 months, and in the past decade, the median house price has increased by 61.7 per cent, which is in line with the long-term average growth.”

He said Mount Gambier’s rental vacancy rates have been trending downward over the past decade and reached the lowest level in 2022 at 0.5 per cent leading to strong rental growth.

Meanwhile, Tea Tree Gully, which is only 15km from the Adelaide CBD, stands out in Greater Adelaide with a good mix of strong economy, relative affordability, lifestyle, and growth prospects according to Mr Paliwal.

“Its house price has been surging since 2021, up by 42 per cent in two years, much higher than Adelaide’s average of 31 per cent,” he said.

“However, its median price of $620,000 still sits lower than Greater Adelaide’s $645,000. In the past 10 years, the median house price has increased by 74.6 per cent.

“Although Tea Tree Gully is currently slightly overvalued, it is still relatively affordable compared to many other Adelaide sub-regions that offer similar facilities and lifestyles.”

He said the rental market in Tea Tree Gully was extremely tight, with a 0.2 per cent vacancy rate leading to growing rents.

Located between Adelaide’s CBD and the Fleurieu Peninsula, Onkaparinga, with a median house price of $575,000, was one of SA’s most affordable Mr Paliwal said.

“The relative affordability has helped the region grow steadily in the past year, even under hiking interest rates,” he said.

“Over the past 12 months, the median house price has increased by 16.8 per cent and in the past 10 years a total of 74.8 per cent.

“The region’s unemployment is not the lowest in Greater Adelaide but has improved a lot in recent years, and now sits at the lowest level in a decade. 

“The $5.4 billion worth North-South Corridor is set to further boost the local economy by creating thousands of jobs and business opportunities.”

He said the rental market had been under extremely high pressure in Onkaparinga, as the vacancy rate hovered around 0.1 per cent for a year, leading to a surge in rents.

Finally, just under a 30-minute drive from Adelaide’s CBD, the Adelaide Hills, with Mount Barker as the main town, has rapidly grown into one of Greater Adelaide’s top performers in recent years.

“The medium house price for the Adelaide Hills has been rising since 2021, increasing by a total of 15.6 per cent over the last 12 months, currently sitting at $651,200,” Mr Paliwal said. 

“In the past 10 years, the medium price has increased by 58.8 per cent. Arjun expects it will continue to show the same figures over the next decade.

“The rental market, just as many other Adelaide regions, has been extremely tight over the past two years, with vacancy rate now sitting at 0.3 per cent.

“Rental growth is expected to continue under this high pressure.”

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Rowan Crosby

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