CoreLogic figures released last week show the median house price in Australia increased by 18.4 per cent in the 12 months to September 1, the fastest pace of growth since 1989.
In Adelaide, the increase for the year was 17.9 per cent to a median value of $522,000.
“I think it’s very likely that this market will remain bullish for some time yet,” Harcourts Packham Managing Director James Packham said.
“When we are auctioning a property, we sell it to one bidder but we see 15 or 20 other disappointed bidders wander off and get back into their car so there is still a very large audience of people who have not yet secured a home but are willing participants in this market with prices as high as they are.”
In a separate validation of the huge competition among buyers for homes at the moment, South Australian online real estate platform RESO registered 468 buyer inquiries and 296 different offers on for just four eastern suburbs homes in the last two weeks of August.
Packham said the market was at ‘fever pitch’ with strong demand fuelled by record low interest rates, dwindling supply and an influx of cashed-up SA expats returning to Adelaide to buy a home.
He said a ratio of sales to new listings used as a metric to measure the health of the Adelaide property market was sitting at 1.4 homes sold for every new home listed.
“What that tells us is the market is ratcheting up even further because we do not have enough new listings to replenish these homes being sold even in this moment,” Packham said.
“We can’t keep having weekends with 50 buyers competing for one house, we need to let the pressure out of that a little bit.
“Traditionally the spring quarter is the time when we see the largest volume of new listings come to the market so I think agents and buyers alike are all hoping we see good volumes of new listings hit the market in spring.
“That will be something to watch and it could immediately soften the market in the short term – a lot of the buyers will be hoping spring will deliver that.”
Packham, who is also a licensed agent and auctioneer, will feature on a panel of SA business leaders this month to launch the 2021 BDO SA State Business Survey.
He said he expected the Business Survey to reveal confidence across most business sectors.
“That confidence leads to investment, spending and all things positive for the economy,” Packham said.
“I think the performance of the real estate market is one of the reasons why people feel so confident – they’ve seen an example of a very large market that affects all of us and it’s performing very strongly.
“That confidence has filtered through to all other areas of the economy now.”
Harcourts Packham has offices in Glenelg, Blackwood and Marion.
Packham said the coronavirus pandemic and its flow-on effects such as working from home and a general move to online had fast-tracked the uptake of new technology that businesses and customers had previously been slow to adopt.
He said in his business this included the willingness of clients to use QR codes and technology that allowed them to sign documents electronically on a touch screen.
“For us, it’s really accelerated the adoption of technology in a way that has really improved efficiency for our business,” Packham said.
“It has been a period of growth for us but we’ve had to pedal very hard because there has been a huge retraction in the volume of listings available for us to sell and that’s industry-wide.”
According to the CoreLogic data released last week, Adelaide is still the second cheapest of Australia’s eight major cities behind Darwin, which has a median value of $486,000.
It is still well below the Sydney market, which broke through the $1 million median value this year.
Packham said Adelaide’s rental market was also being impacted by the housing boom with investors ‘cashing in their chips’ and selling houses to owner-occupiers, which was reducing the pool of rental properties available to let.
He said the influx of interstate investors and expats wanting to take advantage of newly flexible working arrangements had also added to demand pressure.
“Now that we’ve seen this trend of interstate buyers coming in this could actually be the beginning of us equalising with the rest of the nation and if that happens then it would require something like an increase in interest rates to act as a lever,” Packham said.
“People are at fever pitch – they are going to the bank, they are asking what their borrowing capacity is and because interest rates are so low they are being given quite a large number and they are going out and spending the lot in the face of this strong competition to secure a property.
“But with the bullish nature of the market it wouldn’t surprise me if the RBA uses interest rates as a lever to try and cool things off a little bit.”
Each year, the BDO SA State Business Survey gathers the views, concerns and ideas of the state’s business community.
The 2021 BDO SA State Business Survey will launch with a hybrid live and digital event on September 16, including live audience polling and commentary from the panel of business leaders.
Moderator Nikki Govan will be joined by Packham, Jennifer Lynch (McLaren Vale Grape Wine & Tourism Association), Julianne Parkinson (Global Centre for Modern Ageing) and David Fechner (BDO) to discuss the issues facing South Australian business now and into the future.
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