The Adelaide housing market is one of the most consistent out of the capital cities in Australia. Compared to the frequent boom and bust peaks you see in markets like Sydney and Melbourne, Adelaide tends to grow steadily and then stabilise.
But now, faced with the ‘new normal’ of the post-pandemic world, as well as rising interest rates and inflation, how will the house prices and properties for rent in Adelaide fare?
We take a deeper dive into the property price growth both in sales and rental markets in Adelaide.
The Adelaide housing market in mid-year 2022
Adelaide is currently one of the only capital cities where housing values are going up even with the interest rate rises. Over the past three months, the South Australia capital city has seen a price growth of 3.6%, adding another $201,000 to the average home price.
There has even been a rise in sales of 22%. With five out of the 8 other capital cities reporting negative growth, Adelaide is clearly outperforming the others including Sydney and Melbourne.
The $400,00-$700,000 price band is getting the most attention which implies first home buyers, who are also owner-occupiers, are the most active market right now, this according to Turner Real Estate’s Managing Director, Lachlan Turner.
However, experts are saying that interest rate rises and inflation may soon have an impact on borrowing power and soften the growth even further.
What does the Adelaide housing market look like for the rest of 2022?
While the housing market in Adelaide remains positive, it is “losing steam”. From a reported quarterly growth in the first three months of 2022 at 7.4%, the May to June quarter tracked only 3.6% growth. So it’s possible to assume the city will move into a decline.
In regards to interest rates, Australia is currently at 1.85% as of August 2022. That makes the fourth straight month in a row. With these hikes, variable mortgage rates will double and buyers may lose momentum.
Unit prices also rose by 1.4% to a new record high. However, the growth in Adelaide prices is mostly in houses and less so in units.
BuyersBuyers Co-Founder, Pete Wargent says competition is strong in in the coastal areas, but that “Adelaide will still fair better than the other capitals, due to its relative affordability and supply shortage, especially as immigration ramps up again.”
And on a more national level, Tim Lawless from Corelogic stays hopeful. The “short and sharp” spike in the cycle of interest rates may be brought down by potential interest rate cuts predicted by economic forecasters. This could come as early as mid-2023.
This will help incite more people to become home owners and level out housing affordability constraints.
What about the Adelaide rental market?
The rental market is experiencing strong growth in Adelaide, with a 4.3% increase in rental prices in this previous quarter of 2022.
It’s a tight rental market brought on by low vacancy rates and therefore a low supply in rental properties. You can read more about this in our article on cost of rent in Adelaide.
Should I sell my house now or wait until 2023?
Many buyers are hesitant to make decisions right now, as reported by Lachlan Turner. Homes are selling not necessarily on the auction day nor prior, but rather in the period after the auction.
“What buyers are worried about, therefore, is how high interest rates might go”, says Mr Wargent from BuyersBuyers. “Futures markets suggest that the cash rate target could go over 3 per cent next year, so borrowers will likely remain very cautious until there is greater clarity”.
But with Adelaide prices as strong as they are, it potentially puts sellers in a better position than buyers. You also have to take into account whether you live centrally in Adelaide or in regional South Australia.
The regional markets have been performing strongly as well. Buyers who are benefitting from a hybrid work environment are more open to living in regional South Australia instead of close to their offices in the capital cities.
Remember that if you sell your house, chances are you’ll have to buy a new home to live in. So you’re not only hoping for a seller’s market but a decent buyer’s market as well.
Which suburb is good for investment in Adelaide?
When you compare the Adelaide market to other capital cities like Melbourne and Sydney, it’s quite affordable. It’s a good time for investors to buy homes in Adelaide and rent them out, considering the current low vacancy rates and stabilising property prices.
The rental market in Adelaide is strong, with lots of tenants looking for properties for rent in Adelaide.
Here are some of the best suburbs to invest in Adelaide.
Taperoo South Australia
- Median house price: $497,500
- Average rental yield: 4.8% annual growth
Taperoo is about 18 kilometres north-west of Adelaide. With new developments and easy access to the Adelaide CBD, the area is getting a lot more attention as a very liveable suburb. What was previously a suburb hidden on the radar is now on the map with shops, renovated pubs and of course, an awesome beach in your backyard.
Check out more properties for rent in Taperoo SA.
Largs Bay South Australia
- Median house price: $785,000
- Average rental yield: 4.8% annual growth
When it comes to investments, Largs Bay is one of the more popular spots in Adelaide, reporting capital gains of 15.47% for property investors.
The suburb itself is lovely. You have a strong, friendly community with many families as well as beautiful, tree-lined street speckled with well maintained heritage homes. All this just 16 kilometres from the Adelaide’s city centre.
Check out more properties for rent in Largs Bay SA.
Salisbury South Australia
- Median house price: $429,500
- Average rental yield: 4.9% annual growth
Salisbury is a northern Adelaide suburb loved for its peaceful environment and friendly community, just 30 minutes from the Adelaide CBD. Public transport is reliable and you have all the great amenities of a suburban family neighbourhood.
Check out more properties for rent in Salisbury SA.
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