- House prices rose by 28.1% in the year to March 2022
- A slow down, however, has occured
- Property practitioners expect the rental market to tighten even further
Like much of Australia, Adelaide has recorded strong price growth.
As of the March quarter, house prices rose by 28.1% in one year, to a record high of $750,084, according to data from Domain.
However, data for this quarter noted that the upswing lost steam, with quarterly growth four times slower compared to the previous.
“It could indicate buyers are becoming stifled by affordability constraints,” said Domain’s Head of Research, Dr Nicola Powell.
“House prices have grown three times faster over the past year, a divergence that has created a record price gap with houses edging close to double the price of a unit.
“The rapid price escalation will prove to be a financial hurdle for entry buyers. This has resulted in the value of home loans for owner-occupied first home buyers dropping 41% from the early-2021 high.
Nicola Powell, Domain
“It will also be challenging to upgrade from a unit to a house, particularly against a backdrop of low wages growth and the increased costs of living.”
According to CoreLogic, May saw a 1.8% rise in house values, according to CoreLogic. This is bucking the trend seen in the Melbourne and Sydney markets, where prices are declining. In fact, based on CoreLogic data, Adelaide is leading the way.
As of June, dwelling values are up by 5.7% on a three-month basis and 26.1% over the year to June. Over the past decade, the average annual growth rate has been 5.4%.
The quarterly growth trend lifted in Adelaide during May – Perth was the only other capital city to achieve this. Nonetheless, the trend remains below the peak.
Home sales are currently 32% above the five-year average, with time on the market 30 days, Compared to 37 days during the same time last year.
Data from SQM Research emphasises the dramatic rise in property prices – asking prices rose sharply from 2021 onwards.
Adelaide
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In terms of the rental market, vacancies have been on the decline since 2017, with the current levels the lowest seen since the 2000s.
According to SQM, the vacancy rate in Adelaide is just 0.3% as of May 2022, highlighting the rental crisis in the South Australian capital.
Adelaide
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So, what’s in store for 2022?
The Property Tribune spoke to numerous real estate practitioners on the ground to get their perspective on what is happening in the market – and what they expect to happen.
“The Adelaide market has continued its strength in property price growth from last year and only until recently following the interest rate rises, have we now started seeing a softening of price increases,” Mike Lao, Principal of Edge Realty told The Property Tribune.
“Having said that, the property prices in Adelaide are still strong, especially in the middle to lower price areas and there is still an undersupply of stock.
“There has been a growing trend of interstate investors buying investment properties in Adelaide due to the lower price point, relatively higher yields and strong rental market.”
Mike Lao, Edge Realty Adelaide
Mr Lao noted that the Adelaide property market has been relatively stable, and has not suffered from the same swings in price in comparison to Sydney and Melbourne.
“Generally, during a downturn, Adelaide property prices tend to flatten. Over the coming months and years, we expect our sales prices, number of transactions and total listing numbers to return to normal levels and prices to remain steady.”
In terms of the rental market, Mr Lao noted that Adelaide already has one of the tightest rental markets in Australia, with this unlikely to change.
“The vacancy rates have been trending downwards since 2017 and there is no change in sight due to low supply and very high demand for rentals,” he said.
“With problems in the construction industry and immigration borders set to reopen, this will only exacerbate the current rental crisis.”
“We expect Adelaide to continue along steadily, but just not as buoyantly as in recent times,” Belle Property Head of Network Growth, Nick Boyd, told The Property Tribune.
“Due to their average sale price being lower than some other capital cities the attraction of more affordable living will become increasingly important as interest rates rise.
“Coupled with a strong demand for rentals and the housing shortage, this currently places Adelaide as a market to watch.”
Nick Boyd, Belle Property
To view our other prediction articles, do check out the following:
Brisbane Property Market Predictions
Canberra Property Market Predictions
Darwin Property Market Predictions
Melbourne Property Market Predictions
Perth Property Market Predictions
Gold Coast Property Market Predictions
