Adelaide Property Market Update
House prices in Adelaide stabilised in most segments of the market during the final quarter of 2012, with performance expected to remain stable in 2013. Local real estate agents report that buyers are becoming more active, particularly in Adelaide’s inner suburbs, as local confidence levels rise. At the same time there has been some adjustment in the expectations of vendors, with many sellers now aligning with the market.
The realignment of the marketplace means that some home owners who are considering relocating are faced with the prospect of a capital loss. This has led to some inactivity in the marketplace as home owners await a recovery in property prices.
According to researcher RP Data, during December dwelling prices grew by 0.1 per cent. When compared with last year’s annual growth performance, prices have fallen by just 0.8 per cent with the median house price now estimated to be $395,000 and $327,750 for units. The national median dwelling price for the December period was $483,000, with prices falling by just 0.4 in 2012. Although local prices have performed slightly below the national average this is a sound result for the city.
Adelaide’s inner suburban market has reached a trough with overall market performance anything but generic. The performance of properties in outer mortgage-belt suburbs has been underwhelming, with some properties experiencing notable decline. Properties in some inner suburbs have experienced price falls of as much as 10 per cent from the market peak in 2009; whereas properties in some outer suburban areas have demonstrated price resurgence of as much as 15 per cent.
Despite the inconsistency, well-presented and correctly priced properties are attracting sufficient interest to sell in a relatively short period.
Arguably Adelaide’s northern suburbs have been hit hardest over the past three years. During the property boom towards the end of the last decade properties in municipalities including Playford and Salisbury became increasingly popular, particularly with investors seeking a mix of capital growth and strong yields. These areas were also affordable options for first-home buyers seeking to establish a foothold in the marketplace.
Capital growth performance in many of the suburbs belonging to these municipalities was closely aligned with the performance demonstrated by Adelaide’s inner suburbs during this period. However, these suburbs could not sustain this growth trend and therefore property prices in these local markets are experiencing a period of correction.
During this same period there was a significant amount of new housing constructed, in part via generous government grants, which has subsequently led to an oversupply of second-hand properties. As a consequence of this oversupply homes constructed between two and five years ago are selling below replacement cost in some areas. Southern suburbs such asAldinga & SellicksBeachhave also suffered an oversupply of homes and soft demand, although not to the same degree as the outer northern suburbs.
In recent months, auction clearance rates have ranged between 40 and 50 per cent, and relatively few properties have been offered for sale. This is a notable decline from two years earlier when clearance rates were significantly higher at 50 to 60 per cent.
In 2013, property prices are expected to remain relatively stable overall; however, particular areas will perform better than others. Popular inner suburban housing will remain relatively stable while middle and outer suburban housing will continue to experience nominal falls due to local economic pressures such as unemployment.
Bart Quinn, Branch Director (SA)
WBP Property Group