Adelaide house prices continue to buck the trend

Adelaide continues to ride out the most recent market correction with prices remaining relatively steady during September.

In the last month, dwelling values in Adelaide saw no change with the median house price staying flat at $462,945 while units were steady at $322,142 according to the last data from CoreLogic.

While many markets around the country have experienced considerable weakness in the last 18-24 months, Adelaide continues to buck the trend. 

In fact, Adelaide is the third-best performing city in that regard down only -1.6% from the market peak. In comparison, many other cities have seen double-digit dips with Sydney falling over -11.9%, and the mining towns of Perth and Darwin, currently down -21.3% and -30.8% from their peaks.

September 2018 sales prices vs. September 2019

In the table below, Ripehouse Advisory Analysist, Will Farrell shows the shift in capital city market values, comparing the first, median and third quartile sales prices for September 2018 with September 2019.  

The graph below depicts the gains made in Adelaide accross all quartiles in September 2019, when compared to the previous September, while the Sydney, Melbourne and Brisbane markets contracted.

Katherine Skinner, director of National Property Buyers believes competition among buyers has been one of the driving forces for Adelaide property prices in recent months.

“Despite an increase in stock levels, the supply and demand gap is still prevalent resulting in strong competition for quality stock. Due to the high demand for quality stock, we are seeing many runaway results come auction day.  This is down to competitive home buyers, especially owner-occupiers, looking to get their foot in the door.”

“Supply hasn’t been rapidly increasing as we were all expecting. We have seen a steady increase in stock [but] it is lower than normal for the spring season within many areas.”

Given the tight rental market, Adelaide also features strong rental yields and that is also enticing investors according to Mrs. Skinner.

“Investors are currently flocking to Adelaide from all across Australia and the Globe due to lower buy-in price points and higher rental yield opportunities.  Combining this with the high growth pockets within the metropolitan area, you really cannot go wrong if you make the right educated purchase.”

“Incredibly high yield opportunities which combine the three pillars of property investment gold: cashflow/yield, high growth area, and value add opportunities are available throughout many pockets of the Adelaide market.  We are seeing up to 6% in some instances, where traditionally you’d have to sacrifice growth and value add opportunities to see a return that healthy.”

Ripehouse Advisory CEO, Jacob Field warns investors to exhibit caution, however, claiming that the mid-socio areas have become incredibly heated, sitting at around 11-12 o'clock on the property clock.

""While a number of our clients have achieved 20% growth in Adelaide suburbs over the past 12 months, the mid-market is now too heated.

""Obviously Adeliade is not one, but many markets.   We are now only buying at the lower end, at around the 300k mark in a few select clusters.  This is currently where we see the opportunity.""

Dwight Stuchbery, Investment and Project Manager at Griffin Group, suggests that while the headline price change in Adelaide is flat, there are many areas that are outperforming while the local economy is poised to keep on growing.

“Whilst the overall growth figures across Adelaide might look subdued it is interesting to note that over 2/3’s of individual Adelaide suburbs have recorded median price growth over the past 12 months – many of which by more than 5%.”

“The natural positives of investing and, or residing in Adelaide such as lifestyle and the attractive median price point have long been lauded.

""We can now add the inclusion of successful bids for the Australian space agency headquarters, $50bn submarine contract and $35bn shipbuilding program.  Many agents I am speaking with are noting a strong increase in interstate and international buyers looking for their next investment property or purchasing the family home ahead of a move to Adelaide for work or general lifestyle reasons,"" Mr. Stuchbery said.