Adelaide forecast to top Australian property market this year

New forecasts have picked Adelaide to lead property price growth in Australia for the first time in 15 years, with regional SA already seeing the country’s biggest spike in buyers.

Homes in Noarlunga Downs: Adelaide is set to be one of just two Ausralian capitals that will see property prices rise this year. Picture: NCA NewsWire /Brenton Edwards

Property prices in Adelaide are expected to rise as much as 5 per cent for the year to December – one of just two capital cities expected to see rises this year – with Perth mirroring that result and every other capital set to fall from -1 per cent in Brisbane to -6 per cent in Sydney, Melbourne and Canberra.

The latest PropTrack PropertyMarket Outlook July 2022 Report said Adelaide was already seeing the biggest rise in potential buyers per listing of all capitals (21.1 per cent year-on-year in June), while regional SA has gone gangbusters rising 64.9 per cent to lead the nation in that category.

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Alex Pfeiffer at the house he is selling in Murray Bridge. Picture: Morgan Sette

PropTrack head of research Cameron Kusher.

PropTrack head of research Cameron Kusher said it was usually Sydney, Melbourne, Hobart or Brisbane leading the nation, not Adelaide.

“It’s very rare that Adelaide is the strongest market. It’s certainly the first time in a long time. I believe it was best performing in terms of price growth back in 2007,” he said.

“Adelaide is looking like it’s going to be one of the best performing markets and this just comes down to the price of houses – affordability – the fact that prices are much lower in a market like Adelaide,” Mr Kusher said.

A 5 per cent rise by December would see the Adelaide median dwelling price sit around $613,000, with regional SA at about $573,000. Adelaide prices weren’t expected to fall until 2023, when drops of between -3 per cent and -6 per cent were predicted by December 2023.

Adelaide prices rose the second highest of all capitals in the year to June. Picture: NCA NewsWire / Naomi Jellicoe

Adelaide saw the second strongest dwelling price growth of all capital cities in the year to June, rising 23.4 per cent, just slightly behind Brisbane’s 23.8 per cent, but about four times stronger than Sydney’s 6.4 per cent and Melbourne’s 5 per cent.

Mr Kusher said relatively more affordable housing prices in Adelaide would shield it from much of the price falls.

Adelaide’s big advantage is home prices are much more affordable than most other capital cities now. Picture: NCA NewsWire /Brenton Edwards

“Higher interest rates won’t have as much of an effect on Adelaide as they will on more expensive property markets,” he said. “Obviously the big advantage that Adelaide has is it’s a lot more affordable than most other capital cities.”

“It’s still very close to Sydney and Melbourne, so if we see flexible working arrangements continuing, people might be able to do that Sydney or Melbourne job but base themselves in Adelaide. They can still easily commute back to one of those capital cities.”

“Obviously your money goes a lot further in housing in Adelaide than it does in Sydney or Melbourne or even Hobart these days.”

Commuting from Adelaide to Sydney or Melbourne may be on the cards for many given the more affordable housing prices in South Australia. Picture: NCA NewsWire / Naomi Jellicoe

Competition can be expected to be fierce in the South Australian market in coming months, with total listings down -13 per cent in Adelaide year-on-year in June and slashed by a third in regional South Australia during that period (-33.8 per cent).

There are signs of hope with new listings data showing 1 per cent rise in Adelaide and 2.9 per cent in regional South Australia in June.

“With competition easing, properties are taking longer to sell. The median number of days a property was listed on realestate.com.au before selling was 41 in June, up from 38 days in June 2021.”

PropTrack expects the RBA’s cash rate target to rise between 2.5 and 3 per cent by year-end.

PropTrack expects the cash rate to rise between 2.5 per cent and 3 per cent by year-end, with further increases in early 2023 before rates stabilise and potentially fall in late 2023 into early 2024.

Mr Kusher said the main trigger for property price falls was interest rates rises, with latest inflation figures released by the Australian Bureau of Statistics on Wednesday cementing the outlook, after rising 6.1 per cent year-on-year – the greatest increase since June 2001.

“Core inflation rose to 4.9 per cent, well outside of the RBA’s target range and all but confirming another interest rate hike in August. With interest rates set to rise further, property prices will continue to slow.”

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