SA’s most rented suburbs revealed amid investor shift

New data from REA Group identifies South Australia's top investment hotspots, led by Roxby Downs where over 67% of properties are rentals. Despite federal budget changes to negative gearing and elevated interest rates, investors remain active in the Adelaide market by prioritizing high rental yields and long-term fundamentals. This shift in strategy comes as experts warn that declining investor participation could further constrain rental supply and drive up costs across the property sector.

REA Group data highlights a significant concentration of rental properties in specific South Australian suburbs, with Roxby Downs topping the list at a 67.11 per cent rental rate. Adelaide city follows closely at 63.8 per cent, while Elizabeth South, New Port, and Elizabeth Grove also record high investor ownership levels ranging from 58.51 to 63.19 per cent. While overall market activity is described as cooler and more subdued than in previous periods, properties in these high-demand areas continue to sell at solid prices, reflecting sustained growth potential for the region.

Real estate professionals, including Bonnie White of Alexander Real Estate, report that investors are increasingly focused on rental yields rather than tax benefits like negative gearing. For instance, a studio apartment on South Terrace in Adelaide priced between $285,000 and $313,500 currently generates $350 per week in rent, offering a strong yield that attracts buyers despite broader economic headwinds. White notes that while buyers are more cautious and taking longer to finalize decisions, the larger fundamentals of rising rents and strong location continues to drive the city market.

Ray White Chief Economist Nerida Conisbee provides a broader economic perspective, suggesting that federal housing policies and the Reserve Bank of Australia’s monetary policy may be working at cross-purposes. While higher interest rates are intended to curb inflation, they also increase development costs, while budget changes risk discouraging the investor participation necessary to maintain rental supply. Conisbee warns that if these factors lead to fewer investors, the resulting shortage of rental properties will likely exert further upward pressure on rents, complicating the effort to stabilize housing-related inflation.