Q1 2021 Adelaide Property Report
Quarter 1, 2021
Market Overview
The city of churches is the city of low stock and high demand.
Like some of Australia’s other capital cities, Adelaide is a sellers’ market. Supply is down and demand is up, properties are selling for tens of thousands of dollars above the asking price.
The market is HOT.
According to an ABC news article, experts believe the reasons for the price boom include fewer listings, higher levels of interstate interest, the impact of coronavirus on disposable income, a partial reversal of the so-called “brain drain”, and South Australia’s comparative success in dealing with the COVID-19 pandemic. And we wholeheartedly agree.
Whilst we don’t like to knock a man when he is down and we hope Victoria’s Premier Daniel Andrews has a speedy recovery we are still a little grumpy when he publicly questioned why anyone would want to come to South Australia. We know there are lots of reason why this beautiful state is proving popular and experiencing a renaissance. The festival state, the city of churches, the great wine capital of Australia. We are all those things. We have every lifestyle option you could want, coastal, city, the hills and all at an affordable price. Couple that with the success we achieved in handling the coronavirus we have become attractive to interstate buyers and returnee South Australians that are now seeing local opportunities.
Real Estate is being spoken about by everyone right now, so many people are commenting and discussing the current market and looking for advice and assistance, knowing this is quite unchartered territory
Late last year, Adelaide’s median house price reached a record high, peaking at $510,000 and we believe it is on track to exceed this in 2021. However, even then Adelaide remains one of the more affordable markets compared to our eastern state capital cities. And our median price value is quite a sweet spot for many first home buyers, young couples, families and investors.
This level of sustained intensity is a market that many agents would never have experienced. At open for inspections, we are witnessing long queues of people waiting to get inside and we are becoming familiar with some of the faces. People that just can’t find or afford their desired property!
Agents have started placing more pressure to have offers in quickly. You need to be ready to act in this market. Do your research, know your budget and keep your head. Don’t get carried away with FOMO and offer a value you aren’t comfortable with. There are frustrated buyers out there and some have increased their budget, made their criteria more flexible or even decided to lease for the time being.
Low interests are of course a contributor to consumer confidence and increased demand. The RBA held interest rates at the historic low of 0.10 per cent in its April meeting and they are indicating rates will remain near zero until 2024. They have said they will only lift interest rates when inflation is sustainably within the 2-3 per cent band and unemployment rates are lower. The prospect of continued low-interest rates is providing buyers with some assurance over their borrowing rates and payment obligations in the short to medium term.
Adelaide continues to outperform many of Australia’s capital cities, including Sydney, Melbourne, Brisbane, and Perth for average annual growth according to Corelogic’s Index results:
Another indicator of a strong seller’s market is high clearance rates and Adelaide has consistently achieved high rates in Quarter 1 of 2021, as can be seen in the below chart:
Looking forward
There has been a small increase in stock on the market and after the busiest period since opening our doors 6 years ago, we have enjoyed one or two weekends where we haven’t had to line up for 20 minutes just to inspect a home.
Moving into Autumn/Winter, the real estate industry will often start to slow, but we see no signs of that happening here this year. In fact, we are seeing more listings commencing their marketing campaign or being advertised off-market. This is great news! However, pent up demand is still exceeding supply and with low interest rates and the economy stable in Adelaide, prices will continue to rise.
In a report released in March, ANZ economists forecasted Australian housing prices are set to soar 17 per cent this year across the capital cities. They have predicted Adelaide will soar 13 per cent.
Nervousness in other states as government stimulus packages like, Jobkeeper end and the reduction of overseas migration will have less impact in South Australia. Our economy has remained fairly resilient during the pandemic and as Sydney and Melbourne typically receive about 70% of overseas migration we are less impacted by reduced numbers.
It can be quite disheartening for prospective buyers chasing property in this market, however, stay focussed and keep getting out there as I do believe now is the time to act in this rapidly increasing market.
Suburb to Watch
Croydon - "Small but Mighty"
Overview
Croydon is an inner-western suburb approximately 4.5kms from the city centre. This small suburb has only 1,238 people and less than 20 residential streets! Its close proximity to the city with large family blocks on offer is seeing its popularity rise, especially in the last 6-12 months!
For a small suburb, it packs a punch.
The suburb (and neighbouring West Croydon) has gentrified significantly in the last 10-15 years. It was home to an aging population but young professional families are starting to move in.
Elizabeth and Queens Street both provide ample shopping and amenities access. Cafes, bakeries, clothing, homewares, beauty, and health services. Port Road, a major road on the Southern border has a warehouse shopping complex including Officeworks, a gym, Vinnies, a Salvation Army Superstore and a Godfreys Superstore. It could do with a few more restaurants for eating out at night, but we think that will soon be rectified.
Bounded by Port Road and South Road you have great access to the city, the beach and schooling options. It can get a little busy around South Road and trying to get on. Croydon is well serviced by public transport with the Croydon Train Station and bus service run by Adelaide Metro. Today the area is seeing strong growth with the inner west being revived yet again by the establishment of the new government led Transport Oriented Developments adjacent to the rail corridor that runs right through Croydon.
It is a beautiful neighbourhood to walk in, with trees, quiet streets and lovely homes as a backdrop. There are two parks near the train station to take the kids out for a play or enjoy a cycle on the family-friendly bike path that goes from the city to Outer Harbor. A free street music festival is typically held annually on Elizabeth Street, supported by the local Council and bands which everyone gets outs to enjoy.
House prices are on the rise with the median sitting around $670,000. Some homes are now selling for over $1 million as a result of its rising popularity. There are large blocks and prestigious older homes available for renovators to unleash their creative talents on. Architecture is a mix of 1900s villas and 1920s bungalows.
Purchase Example
3 Beds | 2 Baths | 2 cars | Sold $1,017,000 | Agent Listing
Rewired, replumbed, repainted and polished 4-bedroom bluestone villa on a 700sqm allotment approx in Croydon’s most in-demand pocket. Just 300 metres away Croydon’s renowned strip – with cafes, shops and the Croydon train granting a CBD commute in just a few minutes. Enjoy tree-lined street and local foot/cycle paths
Vacancy Rates and Median Prices
Adelaide Q1 Vacancy Rate 0.7%
Summer is always a busy time in rentals and this year was no different. January, February and March all saw the rental market running hotter than the weather. Every property that was launched saw large numbers of enquiry, from quality applicants. Even with rental values being adjusted to be in line with the current market, many applicants were offering more or large amounts of rent in advance, anything that would make them stand out from the pack.
With Adelaide also on the world stage, successfully hosting the Adelaide Fringe Festival within COVID restrictions, along with a number of other smaller festivals, it was a reminder to those interstate and abroad that Adelaide is a great location to live and saw many wanting to move. We fielded calls from many interstate people wanting to know how they could successfully lease a property prior to arriving, something that was proving extremely hard.
While demand is still high and the supply of quality homes in many areas low, we expect demand will continue to outweigh supply well into the next quarter. The current vacancy rate in Adelaide is sitting at 0.7% whilst Melbourne and Sydney have vacancy rates of 4.5% and 3.3% respectively. It is no surprise that investors are taking up whatever opportunities they can find to purchase here for long term investments.
Interstate Investor seeks property in low stock market
by Katherine Skinner
Director
Katherine Skinner began her career in property over a decade ago in Melbourne working in Buyer’s Advocacy and Property Management. Returning to her home town of Adelaide in 2009, Katherine quickly established a reputation as an exceptionally thorough and diligent practitioner, providing outstanding customer service coupled with a calm and positive attitude while working with some of Adelaide’s most highly regarded agencies. Katherine was named the REISA Buyers Agent of the Year 2 years running, a REIA National Awards 2019 Finalist and is the current South Australia representative for REBAA.
0438 729 631 or email Katherine