Adelaide’s ‘truly unprecedented’ house price boom continues, but impact of rate hikes looms

Nearly 19 of Adelaide’s 20 properties have appreciated by more than five percent in the six months to February this year, new property data shows as analysts await the impact of the Reserve Bank’s first rate hike in more than a year. year. decade.

PointDates Lay of the Land fall edition released this week found that 88 percent of properties in Adelaide experienced a price increase of more than 10 percent in the six months to February 2022.

Furthermore, 93 percent of real estate grew by more than five percent in value over the same period, representing nearly 19 of every 20 properties in Adelaide.

The numbers stand in stark contrast to the same numbers reported by PointData around this time last year, when just 12 percent — or three in every 25 properties — experienced a price increase of more than five percent.

PointData also identified the small inner-south suburb of Everard Park as Adelaide’s fastest-growing real estate market, taking the mantle of Sellicks Beach.

Pointdata’s top 10 suburbs by quarterly annualized price growth through February 2021 (Table: Pointdata).

Everard Park, which currently has a median retail price of $894,700, recorded an annualized price increase of 55.7 percent year-on-year in the three months to February, ahead of Beaumont (50 percent), Royal Park (46.6 percent) and Marden. (46.6 percent).

Only three of the fastest-growing price areas were in Adelaide’s eastern suburbs, reflecting an ongoing shift from the lucrative area as the center of the city’s real estate boom.

Three suburbs from the outer south of Adelaide were in the top 10, as well as two from the north west of the city.

PointData, which released the report shortly before the Reserve Bank raised spot interest rates to 0.35 basis points on Tuesday, said looming rate hikes and signs of a slowdown in the real estate boom in the eastern states could eventually translate to Adelaide, though history suggests. that it “tends to occur much later and of much smaller magnitude”.

“What is considered quintessential in the Adelaide residential property market has really changed, with the levels of growth that many thought impossible (or at least extremely unlikely) were seen for nearly the full two years since the start of the pandemic,” he said. the report.

“While there is no solid evidence of the Adelaide market starting to slow down, other states in Australia (particularly the eastern states) are showing similar signs.

“Aspiring buyers in the eastern states are beginning to pull out of the market, fearing interest rate hikes and a subsequent fall in prices.

“Although this behavior is not yet” [documented] in Adelaide, it wouldn’t be a surprise if it came out soon.”

The report comes just days after data from national real estate research firm CoreLogic showed that Adelaide’s property values ​​grew the fastest of any capital city at 1.9 percent in April. Quarterly and annual price growth rates in Adelaide were also the highest in Australia

It also comes after a damning study by Anglicare revealed the level of unaffordability of rent in South Australia. Their report found that only two 1125 listed rental properties listed over the weekend of March 19 were affordable for a single person in SA on minimum wage.

PointData, which described price growth in Adelaide in their report as “truly unprecedented for the market”, attributes the boom in part to buyers’ perceptions of the housing supply.

Ben Russ, PointData’s head of planning and delivery, said there is “a perception of a shortage of market supply” due to a continued decline in online real estate listings coupled with an increase in sales.

“The imbalance between perceived supply and demand is driving high clearance rates, meaning sellers don’t opt ​​for an entire campaign as often, reducing the number of online listings while sales increase,” Russ said.

“The perception of the great magnitude of the reduction in supply caused by observers of the lesser online offerings in itself drives prices up, as the perceived need to be aggressive in the market becomes the predominant attitude.”

House prices, in particular, are expected to come under pressure after the Reserve Bank kicked the ball rolling on Tuesday with its first rate hike in more than a decade.

The RBA raised the spot rate to 0.35 percent from a record low of 0.1 percent after its monthly board meeting, reaching its highest level in more than 20 years after last week’s inflation spike.

RBA Governor Philip Lowe warned that further rate hikes are to be expected in the coming months, because without them inflation would rise significantly.

The Commonwealth Bank of Australia was the first of the four major banks to raise the standard floating rate for home loans on Tuesday, passing on the full 0.25 percentage point increase.

ANZ and Westpac quickly followed suit as National Australia Bank caught up with its competitors on Wednesday morning.

Prime Minister Scott Morrison urged all banks to pass on the higher interest rates to savers as well.

Only Westpac and NAB have so far announced increases in savings rates at the four major banks.


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