Record low interest rates result in collective property market growth / Market in a Minute Ep. 8

It’s Springtime in Adelaide, and although the weather has been somewhat hit-and-miss, our real estate market continues to remain super hot. Investors and owner-occupiers are making the most of these unprecedented market conditions, by selling up at what could be the peak of the market.

Dwelling values across Australia have skyrocketed to more than 20% over the last 12 months. Buyer demand continues to out-pace stock levels, which has resulted in the highest annual appreciation in property prices since June 1989. Nationally, home values rose 4.8% in the September quarter, which has eased from a 6.1% increase in the June quarter.

Locally, home values rose 5.5% in Adelaide over the past 3 months which is higher than the national average. Much of this is due to activity in the upper end, with the top 25% of SA homes in value increasing by 6.8%. This has also resulted in South Australian dwelling values being at record highs, increasing to almost 20% over the past year. Most weekends we are seeing another ‘record’ sale price in popular Adelaide suburbs.

Rental values have increased by nearly 9% for the last 12 months nationally, and 8.3% in Adelaide, the highest annual growth since 2008, resulting in record LOW gross rental yields as a result of such strong capital growth.

This collective market strength continues to be a result of record low interest rates and high savings rates, with Adelaide, in particular, benefiting from population growth, and strong buyer interest from interstate. South Australia has been a magnet for ex-pats throughout the covid pandemic. Our strong border control cemented Adelaide as a safe haven, along with high liveability factors and jobs growth attracting ex-pats and their accumulated wealth back from eastern states. Whether the positive net migration continues when the borders open, and what impacts this will have on our real estate market remains to be seen.

Although the expectation is that mortgage rates will remain at record lows for an extended period of time, we have seen modest steps being taken by regulators to curb the unprecedented property price growth and rising level of household debt. APRA’s announcement to change lending rules and restrict finance can slow down property markets as we are starting to see happen overseas.

So, for those contemplating selling, now might be the time to bring forward your selling plans, reduce risk and take advantage of the hottest market in decades.

That’s a wrap for another ‘market in a minute’, and if you are looking to buy, sell, lease or have your property managed please reach out to one of the OC team.

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Disclaimer: Information in this blog is accurate at the time of publication. Please verify details and consult your agent before making any decisions.