- Total dwelling approvals rose by 31% during the 12 months to July
- Adelaide is the most affordable capital, after Perth and Darwin
- m3property expects prices to increase at a slower rate
While much of the attention surrounding the booming property market concerns Sydney, Melbourne and the Gold Coast, Adelaide can be overlooked.
This is despite house prices in metropolitan Adelaide hitting a record high of $540,000 – up from 13.15% from June 2020 to June 2021 quarter, according to m3property.
Additionally, asking property house prices soared from $522,391 in January 2020 to $601,719 as of this month – a 15% rise according to SQM Research.
Over the 12 months to July, total dwelling approvals soared by 31% compared to the previous period. This resulted in Australia recording the highest number of HomeBuilder applicants per capita.
Kym Dreyer, m3property director, said that while approvals declined from June to July, they were still at an extraordinarily high level.
“The growth has been driven by house approvals, which increased 52% for the 12 months to July, compared to the previous 12-month period,” explained Mr Dreyer.
“Over this period, there were 12,534 houses approved which is the highest number of house approvals in any 12-month period since the ABS started collecting this data series in the early 1980s.”
SA’s Rolling Annual Dwelling Approvals
Unsurprisingly, this growth has started to put pressure on housing affordability.
Adelaide is the third most affordable capital city in Australia behind Perth and Darwin, but mortgage repayments on dwellings in Adelaide account for 31.3% of earnings.
This is above the 30% repayment to earnings ratio that is considered the upper limit for housing affordability.
“Affordability has declined from the June 2020 quarter as house prices have increased in the absence of comparable growth in earnings,” he said.
“Affordability in the SA market outside of Adelaide has also declined, however, with an index score of 115.8, dwellings in this market are still considered to be affordable, with mortgage repayments accounting for 25.9% of earnings.”
Kym Dreyer, m3property director
He added that over the year, house price increases were driven by accommodating lending conditions, government incentives and the low 10-year bond rate driving investment in real estate.
Additionally, the state has also experienced positive net interstate migration since the onset of the pandemic, which has contributed to residential demand.
“Land sales activity has also been strong. Whilst this has not yet been reflected in median land price growth, m3property expects that land prices will increase over the coming six months,” he said.
m3property predicts that property prices will continue to increase across Adelaide albeit at a lower rate.