South Australian Treasury and BankSA forecasts soft housing price landing

Interstate, housing markets are plunging. SA has had a rising housing market for some years – now the experts have their say on whether SA house prices are about to follow the interstate trend.

Adelaide house prices are set to avoid the interstate market plunge and are heading for a soft landing, latest state Treasury forecasts predict.

In analysis supplied by Treasurer Stephen Mullighan, his department forecasts a property market cooling, with conveyance duty transactions falling from 52,409 worth $1.271bn in the past financial year to 40,404 worth $1.013bn in 2022-23.

This outlook was bolstered by BankSA chief economist Besa Deda, who said a sharper downturn was expected in NSW and Victoria.

SA is the only major state housing market still posting price gains, according to the latest Housing Report from BankSA parent firm Westpac, but momentum is slowing after a booming start to the year.

Solutions to a crisis in housing affordability and supply will be discussed at an Advertiser forum on Wednesday, with panellists including Mr Mullighan, Ms Deda, Housing Minister Nick Champion, Property Council state chief Daniel Gannon and Housing Choices Australia managing director Michael Lennon.

Treasurer Stephen Mullighan Picture Simon Cross

Supplying the Treasury forecasts to The Advertiser, Mr Mullighan said the data showed the rapid house price increase in the past 18 months and a huge increase in the number of house sales.

“From this year on, Treasury estimates that house prices will largely remain at current levels, and not fall or fluctuate in the same way as some of the eastern states, while the number of house sales will return to levels only slightly above pre-pandemic levels,” he said.

Ms Deda said Australian lifestyle changes driven by the Covid-19 pandemic had made SA more attractive and underpinned housing demand.

“Large swathes of the population now able to work from home has changed the dynamic for SA. Australians living elsewhere are also seeking to live in SA, with coastal areas south of Adelaide particularly attractive to buyers,” she said.

BankSA chief economist Besa Deda Picture: Liam Kidston.

SA was one of the few states where home prices had not begun to contract but a slowdown had been evident since the start of the year, particularly in “top-tier” properties and houses.

“The stock of housing or supply of housing remains tight. The rental vacancy rate is the lowest in the country, behind Canberra,” Ms Deda said.

“The dynamics mean that the slowdown in SA’s housing market could be more modest relative to some other states and territories.”

Westpac’s August Housing Pulse report says South Australia’s market “looks to be caught between a large shock from interest rate hikes and a very tight supply-demand balance”.

Housing supply remains extremely tight, with listings at less than half the long-term average and rental vacancy rates at about 0.5 per cent.

If not for rapid interest rate rises, Westpac says, SA’s “housing market likely would have been entering a sustained period of tight conditions, strong price gains and deepening affordability problems”.

Louise and Matt Tilbrook with their children Harper, 21 months and Jack, two months. Picture: Keryn Stevens

For electrician Matt Tilbrook, 31, and his wife Louise, also 31, who is a teacher, it is welcome news.

The couple bought a house in Woodville West about five years ago, which has increased in value by about $150,000 over that time.

With a young family – daughter Harper, almost 2, and son Jack, 2 months, Mr Tilbrook said he felt a sense of stability about the future knowing SA’s housing market would not dive.

“It’s good to know,” he said. “We plan to stay here for another five to 10 years.”