Sydney and its world-famous real estate are often central to any discussion about Australia’s wild property market but if we’re going on the data, there’s only one capital city that has proved itself to be unstoppable.
Adelaide – that picturesque city known for its sandy beaches and rich tapestry of culture and heritage – has undergone what can only be described as a seismic shift in recent years, transforming from Australian property’s quiet achiever to the best-performing market in the nation.
Prices soared during the pandemic property boom, to highs that stunned local real estate agents – and buyers and sellers.
Between September 2019 and September 2023, Adelaide’s median house price jumped by a whopping 60 per cent, while units soared by 47 per cent.
Then the downturn hit. When interest rate hikes translated into falling property prices across the country, Adelaide’s property market carried on with barely a wobble. If anything, its rate of growth slowed – but prices never went backwards.
The downturn was something that happened elsewhere, in other cities. In Adelaide, it was a non-event. Prices were resilient and kept rising.
Case in point: the latest Domain House Price Report shows Adelaide’s house and unit prices have both reached new record highs (again).
The median house price is now $844,654, up 4.4 per cent over the quarter and 8.4 per cent year-on-year. Units in Adelaide are $466,379, up 4 per cent over the quarter and 15.1 per cent year-on-year.
“Adelaide is fascinating. Historically, we’ve always referred to it as the quiet achiever, and what we mean by that is that it always sees modest rates of price growth,” says Domain chief of research and economics Dr Nicola Powell.
It’s important to note things are looking peachier across the nation. The Domain report found Australian property prices have almost fully recovered from the downturn, and are nearing pandemic record highs.
But it is Adelaide’s lack of swings and roundabouts – when compared to every other capital city – that really sets it apart from other cities, Powell says.
“It hasn’t seen any material downturn in price, and this is actually what Adelaide does,” Powell says.
“It goes through a time where it sees what I would describe as ‘sideways growth’ – where it sees a slowdown in the pace of growth, which is what we saw last year – but it’s continued to rise and has avoided any negative pullback in price like our other capital cities.
“There is a chronic undersupply for a market like Adelaide. Overall supply is about 33 per cent below the five-year average for this time of the year. And the fact that there are more affordable options in housing than some of our east-coast markets is supporting that demand.”
Local agent Charles Booth of Booth Real Estate says Adelaide has “bucked the trend nationally”.
“I couldn’t have predicted the growth it’s had, but I certainly expected it to follow other bigger cities,” he says. “Typically, when prices go up in Melbourne and Sydney, Adelaide tends to hold fairly steady and would follow later … if they go up by 10 per cent, we seem to follow six months later, but we haven’t seen the downturn they’ve seen.
“It’s been a really strong market and underpinned by a number of things – [and] a lack of stock is one of them. It’s prevailed for a couple of years now, certainly during COVID and whatnot, but this year seems to be tighter than last year.”
The massive property price growth has not been contained to the city of Adelaide. Regionally, South Australia is completely outstripping the rest of the country too.
Domain’s data shows the median dwelling price for the rest of South Australia was $406,580, up 3.9 per cent over the quarter and 16.3 per cent year-on-year – the strongest of all states.
“The interesting aspect for this market is that overspill into the regional markets,” Powell says. “The affordability aspect is there for potential buyers and the changed ways of working are drawing people to relocate to greater Adelaide.”
Booth echoes her sentiment, adding that population growth has created the perfect storm for the state.
“A lot of people are moving here and the pandemic accelerated that,” he says. ‘We are still getting people in from Melbourne, Sydney and locals who left and have now returned because it’s still very affordable.”
The rise in population has only tightened the rental market, Powell says. In September, Adelaide recorded a 0.3 per cent vacancy rate, down one percentage point from the previous quarter – it’s the tightest rental market along with Perth, according to Domain data.
Lorraine March of M.E. Property, who lists both rental and sales properties, says demand for properties in the under-$450 market is strong.
“Anything under that price, we’re getting inundated with inquiries,” she says. “Then as soon as we get over that $500 to $800 a week mark, the pool of people that we have to select from is less and less.
“We’re still managing sales out of our rent roll but we’re also replacing most properties so the market is almost levelling itself out.
“Pre-COVID, the market was slow but we had some of our best months through COVID both in the sales and rental markets … we were a little nervous about the economy and people losing jobs but that hardly happened and it’s managed to remain buoyant to now.”
Booth expects the market to continue its uphill trajectory but at a slower rate.
“During COVID, particularly, we would get about seven to eight offers for a home and now we’re getting between two and three. It’s thinner but there’s still that demand,” he says.
“There’s just not enough stock at the moment and I don’t see where that supply would come from in the next six, 12 to 18 months so I think the market will continue much the same for the next six to 12 months.”
Powell says there is a gross undersupply of housing “and that is not a quick-fix solution in terms of supplying that market, so I do think prices will continue to rise – I think it’ll be that shining star out of all of our capital cities, and it has consistently been that”.
Source : Domain