Adelaide’s most overvalued and undervalued suburbs revealed

A new report has revealed the overvalued suburbs househunters should steer clear of. See the full list, as well as the suburbs where you just might grab a bargain.

A new report has revealed Adelaide’s best and worst buying opportunities – and there are a few surprises in the list.

According to a new report by DSR Data identifying Adelaide’s most undervalued and overvalued properties, Norwood units have been identified as those with the most room for capital growth.

MORE NEWS

Renovated character home tipped to smash suburb record

Chance to snag a half-finished renovator for under $250k

It’s back! Jaw-dropping beachside luxury back on the market

The suburb has a median unit price of $422,100, placing it in an easily achievable price bracket for both first homebuyers and investors.

Glenunga houses – which carry a median price of more than $1.073m – were ranked second, while Plympton units, Westbourne Park houses and Rosewater houses rounded out the list of the best suburbs to buy in right now.

DSR Data analyst Jeremy Sheppard said undervalued suburbs were typically areas with a long history of sub-par growth coupled with a recent improvement in demand.

“It’s underperformance followed by green shoots,” he said, noting that some undervalued areas had large price falls last year and were now more accessible for budget-conscious buyers.

“They’re suburbs where prices hit a peak and came down drastically in the last 12 months and you’d have buyers thinking maybe the properties are good value now.”

41 Miller St, Unley. Unley houses were described as “undervalued”. Supplied

Anyone buying in these undervalued areas could benefit from rapid capital growth, Mr Sheppard added.

“You could see above average growth in the next few years, while it’s still comparatively better value for money,” he said.

When it comes to properties the report suggested buyers avoid, Craigburn Farm houses – with a median of more than $1.138m – were deemed the state’s most overvalued.

Houses in St Mary’s, Oakden, Clarence Gardens and Blair Athol rounded out top five most overvalued properties in metropolitan Adelaide.

Suburbs were considered “overvalued” if prices had risen dramatically over a short period and were now well above the cost of similar homes in nearby areas and where the supply of properties available for sale within the local market was beginning to outweigh demand, suggesting impending price falls.

Jacaranda Trees spring into purple bloom on Manuel Ave, Blair Athol. Blair Athol houses were found to be “overvalued” in the report. Picture Emma Brasier.

Mr Sheppard said “overvalued” markets were often areas where buyers could no longer justify paying the inflated prices on offer because they could get better value in nearby areas.

He said the buyers who would be most impacted would be those who run into tough times soon after purchasing.

“They may struggle to cover their transaction costs if they need to sell,” he said.

In determining whether a suburb was undervalued or over valued, the report considered a suburb’s demand to supply ratio, market cycle timing, ripple effect potential, the unit to house ratio, and the value of surrounding suburbs, among other factors.

Agent Karina Highman at the Norwood unit she is selling. Picture: Naomi Jellicoe

Real Simple Real Estate director Karina Highman, who is currently selling a unit at 6/303 Portrush Rd, Norwood, said she wasn’t surprised to hear units in the suburb had been earmarked for future growth.

“There are some great public schools in the eastern suburbs and Norwood is in proximity to Marryatville and some great public primary schools, and also, with the redevelopment of Burnside Village, there is huge potential for additional growth in the east.

“Norwood is such a fantastic place to live. The unit I’m selling in Norwood, I sold that in 2020 … and, yes, it’s had some improvements, but now it’s expected to sell for nearly $200,000 on top of what it sold for then.”

The new look Norwood International High School on The Parade, Norwood. Picture: Supplied

Ms Highman said buyers should not necessarily be put off buying properties on DSR Data’s “overvalued” list.

“It’s great if you can get some quick wins, but if you’re buying real estate for the long term and holding onto it for that average seven years, I think everyone’s going to see a really good return on their investment,” she said.