Household property prices predicted to increase by 11 per cent
The Adelaide property market is set to explode over the next three years as prices soar due to housing shortages — but not all the experts agree.
Adelaide’s housing shortage will help push prices up by 11 per cent over the next three years to a median of $550,000, a report says.
Forecaster BIS Oxford Economics will today release its Residential Property Prospects 2019-2022 report, estimating Adelaide will record the best price growth around the country other than Brisbane.
The Real Estate Institute of South Australia also said a lack of stock was driving up house prices.
The report’s author, Angie Zigomanis, said an undersupply of homes and moderate economic growth had produced “modest” Adelaide price rises in recent years.
“These (ongoing) factors should lead to slightly stronger price growth in the next few years, with median house and unit prices forecast to rise by 11 per cent and six per cent respectively in the three years to June 2022,’’ he said.
“The downturn in Australia’s residential market is approaching bottom, but any meaningful recovery remains a way off. But Adelaide’s story is slightly different from the national forecast.’’
The report predicts the median Adelaide house price will rise from $495,000 to $550,000 by June 2022.
Adelaide’s predicted growth is second only to Brisbane, where median house prices are tipped to rise 20 per cent from $553,000 to $665,000.
Melbourne and Sydney prices are expected to increase by just 7 and 6 per cent respectively.
Mr Zigomanis said nationally two factors were combining to keep prices down – tight lending policies by the banks and an oversupply of new homes.
SA Valuer-General’s figures show a 2.99 per cent increase in Adelaide house prices over the past year. REISA president Brett Roenfeldt said the BIS Oxford Economics predictions were optimistic.
But he said Adelaide had outperformed other Australian capitals over the past year and the lack of housing supply was a major influence, as buyers fought over available properties.
“I have no doubt that (house prices) will continue to increase because of the shortage of stock in the marketplace, but also because of the large amount of infrastructure projects right across the state,’’ Mr Roenfeldt said.
“We have probably not seen this level of major infrastructure investment occurring here in decades. That creates confidence in certain sectors of the economy, which is always good for real estate.”
Mr Roenfeldt said some of the major projects in Adelaide over the next few years could not be done without an influx of workers with expertise in certain fields.
“The ASC shipbuilding site at Osborne is going ahead, boosting growth in that area.
“Also the old RAH site will see many people coming from overseas and interstate to be part of that. The space agency also will require a lot of expertise from outside the state, and in the Iron Triangle things are starting to happen with a lot of investment there.’’
Nationally, BIS Oxford Economics expects “relatively muted” economic conditions over the next 12 months, before they accelerate in 2020/21.
“Weak wages growth is holding back consumer spending, while a decline in new dwelling construction is becoming a drag on the economy,” Mr Zigomanis said.
$64,200 windfall as the bids kept coming
Dave Miles says he would have been “stoked” if his family property at Parafield Gardens sold for $210,000 rather than the listed price of $199,999.
“Beyond that at another estimate of $230,000 I didn’t believe that, and when it ended up going for $273,000 I was blown away,’’ Mr Miles said.
Not even the deafening sound of passing jet engines coming from the nearby airport were enough to deter close to two dozen buyers at the auction on Saturday.
A total of 18 registered bidders lined the street outside 6 Miller Cres in the hope to secure the renovator’s delight, which had been slated for subdivision.
Following an opening bid of $150,000 and seemingly countless $1 bids thereafter, the three bedroom house sold for $273,102 – $64,202 above reserve.
Selling agent Ryan Stapleton, of Ray White Norwood, said the sale exceeded price expectations and highlighted “that auctions work”.
“All this for a relatively simple 1960s, three bed, blonde brick home next to an airport,” he said.
“It was a nail biting finish with the auctioneer, Brenton Ilicic, finally taking $1 bids. He later told me he never seen so many hands flying up at an auction all at once.”
The property, located on a spacious 713sq m block directly adjacent Parafield Airport and its flight training area, was eventually sold to a private developer.