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ADELAIDE RESIDENTIAL MARKET REVIEW DEC 2021

1. Market Performance

“Over the past 12 months, the Adelaide residential market has experienced a bullish growth”.  

It is significantly above the 30-year averages.  The median sale price of houses in metropolitan Adelaide has grown from $390,000 in the Dec 2011 quarter to the median, at the start of the pandemic being January 2020, to a median in the March quarter of $479,000 and then surged to a median of $560,000 in the Mar 2021quarter. 

Metropolitan Adelaide recorded a median price increase of 13.82% year-on-year over the 12 months, with the growth trajectory expected that the surge will have continued to the end of the December 2021quarter when released.  This price growth has been driven by key macro economic conditions, and in line with many suburbs right across Australia.

2. Market Conditions/ Key Price Growth Drivers

The market conditions under which median price growth occurred over 2021 was principally driven by the following big macro economic influences.

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  • The historically low interest rate environment.
  • Ex-pats or interstate buyers seeking to return to Adelaide.
  •  The COVID19 pandemic.
  • The dominance of the downsizing population.
  •  Cashed up private investors.
  • The very low supply rates in all price ranges.
  • The pent up and high demands for well-located properties
  • A seller’s market dynamic.
  • The range of fiscal stimulus programs 
  •  The Federal Home Builder Grant

In recent months, there is emerging market evidence indicating that the residential real estate market may have peaked, and the steam is now coming out of it, with a corresponding sharp increase in the supply of housing hitting the market. New listings within the Adelaide residential market for both houses and units are now trending above the 5-year average and is outpacing the corresponding growth in buyer demand, so if this trend-line continues, then this will change the current residential market dynamics.

3. Our Outlook Opinion for 2022

“Past performance of the residential market is not an indication of future performance when it comes to the pricing of real estate, like other investment sectors.”

Notwithstanding the past exceptional bullish growth, and its changing trend-line, we recommend for Vendors to take a cautious and tempered approach to both their price setting when listing their homes. 

By mid to later part of 2022, we expect that the broader national housing market is likely to correct itself, restoring a closer balance to the long term trend-lines, restoring the balance between the sellers and buyer’s market conditions. Vendors should be aware that Adelaide is not immune to the broader economic market conditions and consumer sentiments across Australia. Increasing interest rates together with tighter lending conditions are expected over 2022 and is likely to drive price corrections across Australia by early 2023.

Tim Lawless recently commented in the Core Logic article titled “Peak, peaking, peaked – how to read Australia’s housing market” talks about this trend and the key signals that a market is approaching its peak, saying

“Normally, housing growth trends will gradually slow before moving into a correction phase, which is what we are seeing now. However, this isn’t always the case. During periods of shock such as the GFC or early in the pandemic, housing trends turned quite sharply into negative territory”

Mr Lawless then identifies the other signals to watch and he says they include: rising advertised stock levels, affordability constraints, weakening auction clearance rates, softening vendor metrics such as longer days on market and larger levels of discounting. Mr Lawless also says

“It’s fair to say we are currently seeing a softening in all of these metrics, albeit from an historically high base,” 

Adelaide Vendors can however take some comfort in 2022 and beyond in the fact that Adelaide is still one of the cheapest cities in Australia and selling conditions are likely to remain in favour of the vendor over the year.  We also anticipate that there may become a greater push for and more demand towards more affordably priced housing stock and there will become an abundant choice for buyers in both off-plan and established unit/apartment stock being listed for sale.

 

 

The presentation and marketing plan, together with your pricing strategy, for your home or project products when being listed into the market will as is always needed to leverage the selling benefits of your home, but it will become even more important that a distinctive, attractive, and cost-effective marketing package is implemented when selling to ensure it has a wider reach to the as is possible your targeted audience of potential buyers.

 

 

For our vendor clients and potential clients, we will guide you on a pricing strategy and the market pricing for the prior to your home being released into the market and guide you so you can more accurately consider and reflect the market conditions at the time of your sale so it will attract the appropriate volume and types of potential buyers from your upfront investment in marketing.

 

 

If you thinking of selling in 2022, our team would welcome the opportunity to provide you with an appraisal for what your home could sell for in todays market.

Thinking of Selling?

Ask us to give you an appraisal on what your home could sell for on the market today.
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