ADELAIDE–
a better place to invest in property
Adelaide is well known for its relaxed lifestyle and housing affordability. Although house prices have risen in the past few years, our housing affordability is still much more reasonable than the eastern states, and this is helping to keep our property market healthy.
Adelaide is also an excellent location to buy an investment property. Not only is property more affordable, but the market continues to move forward. Unlike the eastern states, Adelaide’s house prices did not experience any negative growth in 2004.
Median house prices in Adelaide rose by 10.7 per cent over the past year to reach a median of $270,000 in the December 2004 quarter.
Meanwhile, Sydney and Melbourne’s house prices decreased by 10.2 per cent and 1.2 per cent respectively. These drops take Sydney and Melbourne’s median house prices to $471,000 and $382,000.
Getting good returns for an investment property is more favourable in Adelaide. The rental vacancy rate has been consistently low for the past few years, with the December 2004 quarter finishing at 2.3 per cent.
In comparison, Melbourne’s residential vacancy rate has moved to the higher level of 3.8 per cent, while Sydney’s sits at 2.4 per cent.
Good news to property investors is that weekly rental prices are also moving forward in Adelaide. Our median weekly rental price is $210, with growth of 7.7 per cent over the past 12 months.
In comparison, Sydney and Brisbane’s prices have not changed at all, while Melbourne’s has risen by just 2.3 per cent. Also in the eastern states, the entry price to invest in property is higher, in line with property prices.
Adelaide has defied the trends of the eastern states by avoiding the downturn which hit these cities following the housing boom.
Adelaide’s steady and reliable market has allowed both sale and rental prices to grow at a more stable pace, rather than have sharp increases and then sharp drops; and the outlook for the property market remains positive.
Becoming a landlord
When buying an investment property and taking on the role of a landlord, there are many things one must consider. Being a landlord is not just about buying a property and renting it out – it means understanding the legal responsibilities and rights of both oneself and one’s future tenants.
It is recommended that you use a qualified property manager or agent to look after your rental property, as such a person takes a lot of the responsibilities out of your hands.
An agent would be familiar with the provisions of the Residential Tenancies Act 1995, and responsible for arranging inspections and reports, advertising the property for lease, selecting the tenant (with your approval), chasing rental arrears and dealing with any complaints.
A “management agency agreement” should be negotiated and signed by you and the property manager before renting out the property. This agreement would set out all the commissions, charges, fees and other services to be provided by the agent.
The property manager or agent will carry out inspections on the property, but the landlord is responsible for the repairs and maintenance and, ultimately, ensuring the property is safe.
Your management agency agreement will outline to what extent the tenants or agent can arrange for repairs.
If you decide to manage the property and tenants yourself, you must follow several rules and processes under the Residential Tenancies Act 1995. There can be a lot of time involved in dealing with tenants and organizing repairs, and you will have to handle any complaints yourself.
Other things to think about if you are planning to buy an investment property are capital gains tax, GST, insurance, land tax, security and maintenance on the property. Your local property manager or real estate agent is a good source of advice for all of these important issues.
