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Adelaide's 'truly unprecedented' house price boom continues, but rate rise impact looms

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Almost 19 out of every 20 properties in Adelaide increased in value by more than five per cent in the six months to February this year, new real estate data shows, as analysts await the impact of the Reserve Bank’s first interest rate hike in more than a decade.

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PointData’s Lay of the Land Autumn Edition released this week found 88 per cent of Adelaide properties experienced price growth of more than 10 per cent in the six months to February 2022.

Further, 95 per cent of properties grew more than five per cent in value over the same period – equating to nearly 19 out of every 20 properties in Adelaide.

The numbers fall in stark contrast to the same figures reported by PointData this time last year when just 12 per cent – or three out of every 25 properties – were experiencing price growth upwards of five per cent.

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

Pointdata’s top 10 suburbs by three-month annualised price growth to February 2021 (Table: Pointdata).

Everard Park, which currently has a median sale price of $894,700, recorded an annualised three-month price growth of 55.7 per cent in the three months to February, ranking above Beaumont (50 per cent), Royal Park (46.6 per cent) and Marden (46.6 per cent).

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

Three suburbs from Adelaide’s outer south featured in the top 10, as did two from the city’s north west.

PointData, who published the report shortly before the Reserve Bank lifted the cash rate to 0.35 basis points on Tuesday, said looming interest hikes and signs of the property boom slowing in the eastern states could eventually translate to Adelaide, although history suggests it “tends to occur significantly later and of a much smaller magnitude”.

“What is considered typical in Adelaide’s residential real estate market has well and truly shifted, with the growth levels many thought impossible (or at least extremely unlikely) having been observed for almost the full two years since the pandemic begun,” the report states.

“While there are no solid indications that Adelaide’s market is beginning to slow, other states in Australia (particularly the eastern states) are showing such signs.

“Prospective buyers in the eastern states are beginning to withdraw from the market, over fears of rate rises and a subsequent fall in prices.

“While this behaviour hasn’t yet been [documented] in Adelaide, it would come as little surprise if it emerged soon.”

The report comes just days after data from national property research firm CoreLogic found property values in Adelaide grew the fastest of any capital city in April at 1.9 per cent. Quarterly and annual price growth figures in Adelaide were also the highest in Australia

It also comes after a damning study from Anglicare revealed the extent of rental unaffordability in South Australia. Their report found just two listed rental properties of 1125 listed on the weekend of March 19 were affordable for a single person in SA on a minimum wage income.

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

PointData head of planning and delivery Ben Russ said there has been “a perception of a market supply shortage” due to a continual dip in online real estate listings combined with an increase in sales.

“The imbalance between perceived supply and demand is ensuring high clearance rates, meaning vendors aren’t opting for a full campaign as frequently, causing this reduction in online listings while sales increase,” Russ said.

“The perception of the large magnitude in the reduction of supply brought on by observers of the lesser online listings is in itself driving up prices, as the assumed necessity to be aggressive in the market becomes the predominant attitude.”

Housing prices in particular are expected to come under pressure after the Reserve Bank started the ball rolling on Tuesday with the first interest rate hike in over a decade.

The RBA lifted the cash rate to 0.35 per cent from a record low 0.1 per cent following its monthly board meeting, and coming after last week’s spike in inflation to its highest level in over 20 years.

RBA governor Philip Lowe warned further interest rate rises should be expected in coming months, because without them inflation would grow substantially.

Commonwealth Bank of Australia was the first of the big four banks to hike its standard variable home loan rates on Tuesday, passing on the full 0.25 percentage point increase.

ANZ and Westpac quickly followed suit, while 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 the depositors as well.

Only Westpac and NAB have announced saving rate increases so far among the big four banks.

-With AAP

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