The best suburbs in Adelaide to invest in

South Australia is brimming with opportunities for property investors looking for capital growth. There is a vast array of property types as well as suburbs.

The suburbs may be located close to one another but can differ so much in what they offer and how the locals view and label the area. This is great for those looking to diversify their investment portfolio. However, there are also many entry-level properties available for novice investors.

Adelaide suburbs have experienced consistent growth despite the less than ideal recent conditions. In 2020, houses on average were 6.1% higher in price than in the previous year, and the region has moved from the second position as the most affordable Australian city to fourth1 in terms of property prices. The growth can still be attributed to affordability as well as the desirable lifestyle the city has to offer.

How to determine whether a suburb offers capital growth

There are some other objective ways of determining if a property will rise in value (or at worst retain its current value).

Consider the following typical indicators. These cater to long-term ownership and favour houses over units/apartments:

• The number of residents that are in scarce skilled jobs (whose income is statistically above average).
• The median rental yield has an impact on the passive income from investment properties.
• Demand for property outweighs the supply.
• Positive growth in the area, based on historical data.
• Projected improvement in the surrounding infrastructure.

Let’s now delve into how the following six suburbs fare against the above criteria. When making reference to rental yields these apply to houses and not units.

• Median 3 bedroom house price: $805,000
• Year-on-year change in the median sale price: +5.4%
• Rental yield: 2.9%

Located just north of central Adelaide, Prospect is a family-friendly suburb that combines several different architectural styles. There are many older-style homes to choose from, as well as bungalows and even contemporary units.

Although the suburb is dotted with older-style architecture, the actual distance from the CBD is a mere 2.5 km. Access to the city is made even easier by the presence of two passenger train stations. The suburb is home to 13,275 people, of which 28.63% makes use of rental accommodation.

The region experiences a vacancy rate of just 0.72% and there is a decently high demand as each property on the market receives an average of 949 visits per month.

The properties themselves have large rooms and backyards. This is ideal for the current community as the dominant demographic is families of varying ages. Prospect also has a reputable schooling district that adds even more appeal for families. Having said that, the area is still ideal for solo established city workers due to its proximity to the city.

• Median 3 bedroom house price: $630,000
• Year-on-year change in the median sale price: +7.22%
• Rental yield: 3.6%

Blackwood is perhaps most notable for its impressive growth in rental yield. The suburb has seen a year-on-year increase of 7.22% in the rental price. However, of the modest population of 4,175 people, only 14.95% of the residents are tenants. There is also a very low vacancy rate of 0.26% and it can take around 56 days to sell a property.

The region experiences very high demand, with each property receiving an average of 3,060 visits per month. Blackwood is also a family-friendly suburb with many daycare and schooling facilities close by. This would explain why the largest demographics are older and established couples and families. Despite the low price point, the average weekly household income has been consistently much higher than the South Australian average.

Blackwood is located 15 km away from the CBD, so it would be ideal for those looking to invest further out. The affordable price point, coupled with decent capital gains, will suit someone aiming to invest long term.

• Median 3 bedroom house price: $797,500
• Year-on-year change in the median sale price: +6.78%
• Rental yield: 3.1%

Torrensville is located 3 km west of central Adelaide. The suburb is also home to a modest 4,046 people, of which a substantial 31.64% make use of rental accommodation. Torrensville is conveniently located close to many exciting amenities and is a short drive away from the beach.

In terms of growth indicators, there is a South Road upgrade underway. This renovation of the road network will provide access to the north and south with a much shorter delay than was the case previously. Some of the local medical facilities are also experiencing major improvements. Not only is this an upgrade in infrastructure and service, but it will also bring in more professionals that may need local accommodation.

The suburb has a vacancy rate of 0.66% and there is a high demand for property. Each property receives an average of 1,824 visits per month and It takes around 60 days to sell a house.

This suburb has tremendous potential and is more of a hidden gem when it comes to investment properties.

• Median 3 bedroom house price: $895,000
• Year-on-year change in the median sale price: +13.85%
• Rental yield: 3.76%

Stirling is a blue-ribbon suburb located 15 km south east of the CBD. The suburb is home to 2,955 people. Around 90% of the residents own their property and the average age of the residents is 60 years old. This mature and established demographic earns well above the South Australian average , which may explain the high percentage of owner occupancy.

The suburb experiences the highest demand of the list entries with an average of 3,877 visits per property per month. The vacancy rate is 0.23% and each property sells within 104 days on average.

The suburb boasts many restaurants and cafes and there is a decent combination of urban living and natural surrounding greenery. The properties are spacious, with high ceilings and generous backyards.

Although the rental yield is very high, it is more likely that your investment property will see profitability from capital gains or a once-off sale of the house. This kind of investment may require a great deal of patience, so be aware of that going in.

• Median 3 bedroom house price: $475,100
• Year-on-year change in the median sale price: +5.68%
• Rental yield: 4.76%

Banksia Park is the most affordable entry on the list. It also has the highest rental yield from all of the entries. However, that may not amount to more money than the others when considering the value of the properties.

The suburb is home to 3,290 people and 8.49% of them are tenants. The demand in the region is high and the quantity of property available to rent or buy is very low. The vacancy rate is a very low 0.07% and it takes on average 63 days to sell a property.

Around 33% of the occupants are retirees who may not want to part with their property, and earn a lower than average income. The other major demographics are family households and mature/established couples.

While Banksia Park has no growth indicators in terms of infrastructure upgrades, it does have some promising numbers on its side. This suburb is for investors looking for an entry-level property with a high rental yield. The high demand may also allow you to negotiate for a better deal when selling in the future.

• Median 3 bedroom house price: $630,000
• Year-on-year change in the median sale price: +9.35%
• Rental yield: 3.8%

Topping our list is Semaphore, a seaside suburb situated 14 km from Adelaide. The beach itself has many leisure amenities. It is also praised for its natural low dune landscape that creates the illusion of being far away from any high-rise buildings. The locals always mention the plethora of restaurants that range from fine dining to casual brunch venues. All of these are usually found on Semaphore Road, which is a big asset to the suburb.

The suburb is known to be very walkable, which suits the seaside lifestyle. The region is very family-friendly and less commercialised than the other coastal areas. There are also many schools to choose from within a 5 km radius, which may explain why the main demographic is established couples and families.

Most of the available properties are detached houses and around 26.1% of the properties are rented. The suburb is home to 2,767 people with the median age of the residents being 40-59 years old. The average weekly family income sits well above the South Australian average, which is good news for potential landlords.

The suburb experiences high demand, with each property getting on average 2,087 visits per property per month. For reference, the South Australian average is 1,347 visits. The vacancy rate is 0.44% and it takes around 87 days to sell a property. The properties are semi-affordable, popular, and have decent growth metrics. This is a suburb that provides great all-rounder properties for first-time and experienced investors alike.

Final thoughts

If you intend on renting out your investment property there are some things to keep in mind no matter what city or suburb you decide to buy in. You should know what your potential tenants are looking for when searching for their next rental property. This will greatly support your search for a home that they view as desirable.

Seeing the house from their perspective can be very helpful. An easy way to do this is to get opinions from people you know that come from varying demographics. Just remember to ask people who you know will be honest with their opinion.

Don’t neglect all of the analytical and numerical data, but don’t let it be the only determining factor in your purchase or sale. As mentioned in other posts, it’s good to also get some additional ‘on-the-ground’ research. This includes checking to see if the area is prone to natural disasters and speaking to locals to hear their take on the area.