Adelaide hits record house price, despite slow September quarter

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Despite a subdued September quarter, analysis from the Real Estate Institute of South Australia (REISA) has revealed house prices in Adelaide have reached a new high.

According to the REISA, Adelaide’s median house price grew to $430,000 over the three months to the end of September, a new record for the city.

It wasn’t a record mark the city roared past however, with the REISA figures showing the median price grew by only 0.23% over the quarter and 4.62% over the past year.

While the September quarter may not have come with double or even single-digit growth, REISA president Alex Ouwens said there should be a positive outlook for the city.

“There is great cause for optimism. It is fantastic that the median price continues to go from strength to strength and this quarter once again breaks the record for median price,” Ouwens said.

“In addition, investment in real estate in South Australia is increasing and auction clearance rates are also steadily improving,” he said.

The languid pace of capital growth seen in Adelaide over the quarter likely had to do with a drop in the number of sales in the city.

Over the three-month period Adelaide saw 3,484 houses sold, down from the 4,012 sold over the same period last year.

The September sales figure followed a similar low amount for the June quarter, but Ouwens said there isn’t any real cause for concern.

“We obviously would like to see a greater number of sales but the winter months are traditionally a slow period for sales and these figures merely mirror what happens every year during this time,” he said.

“The third quarter is notorious for this and this has been the case for many years now.”

While the REISA statistics may not paint a picture of a booming Adelaide, for Paul Siwek, principal of Logica Property, it’s a matter of looking a little bit deeper to find the areas that are performing well.

“I wouldn’t say there is one single market in Adelaide. In a place like Sydney or Melbourne you could probably look anywhere and see signs of growth, but in Adelaide it’s a bit different,” Siwek said.

“There are areas that are preforming quite strongly right now and then there are some that you probably wouldn’t go near,” he said.

In particular, Siwek nominated Adelaide’s inner and middle rings as areas to look at, with different property types in each area proving popular.

“In the inner areas unit’s and townhouses are what buyers are targeting. They’re available at about $400,000 which for many people is a pretty good price point and after strata fees they’re returning yields of 4.5% to 4.7%.

“In the middle ring houses are a bit more popular, but in particular ones that that come with enough land that could make them suitable for a subdivision or development in the future.”

It’s the performance of the middle ring properties that Siwek says highlights the differing performance of areas across the city.

“The REISA figures show that sales are a bit sluggish, but those properties in the middle ring are being sold in days under multiple offers.

“They’re offers that are from people who haven’t even seen the property. I recently purchased one for a client that had four or five offers from people from out of state who hadn’t seen it themselves.”

While concerns about the manufacturing industry in the state may have put some people off Adelaide and South Australia as a whole, Siwek said there are a growing number of people looking to buy on the counter-cycle.

“I think there’s a perception among people outside of Adelaide that conditions aren’t great. They talk about Holden shutting down and where are the submarines going to be built, but I think people should realise that doesn’t affect everywhere.

“There seems to be a growing number of people, especially from Melbourne, who are looking at Adelaide and see that it’s probably a little undervalued and think in the next 12 – 18 months or two year that it will come back up to the trend line.

“For those that do by now and buy well, that is buy in the areas that have strong fundamentals, then they’re looking at some good returns.”
 

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