A transformative year for the real estate industry / Market in a Minute ep. 20

Short, sharp, stats & updates on what’s happening in Adelaide’s property market in November/December 2022

 

 

Market in a Minute / Episode 20

It’s time for our final “Market in a Minute” for 2022!

It has been a transformative year for the real estate industry. With surging inflation and rapidly rising interest rates, the Australian housing market has experienced slower activity compared to 2021.

As we enter the holiday season, Australian dwelling values have dipped -0.9% over the last 12 months, marking the first annual decline since October 2019. Except for regional South Australia, every capital city and rest of the state region has recorded a drop in housing values. Properties continue to take longer to sell with the median days on the market increasing to 36 days, up from the 35 days recorded the previous month.

Although dwelling values remain well above pre-COVID levels, indicating most homeowners remain in a positive valuation position. As of October, new listings started to trend upward, but the traditional spring selling season remains well below levels from the same time last year and compared to five years ago.

In South Australia, due to affordable housing values, solid buyer demand, and positive migration, Adelaide’s housing market has proven more resilient to falling prices than most capital cities, with a dwelling index up 44.7% through the growth phase, adding approximately $203,200 to the median dwelling value.

The low advertised stock levels also help maintain Adelaide home values, which were 43% below the five-year average at the end of October. Adelaide also boasts the tightest rental market conditions with a vacancy rate of just 0.3%, which is likely to keep upward pressure on rents for the foreseeable future.

Turning to finance, at its December board meeting, the RBA further lifted rates by 25 basis points to 3.1% – its highest level since December 2012.

Reflecting on the hike, RBA governor Philip Lowe said, “Inflation in Australia is too high, at 6.9 percent over the year to October.” Mr Lowe added that “Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply”.

Tim Lawless, CoreLogic’s research director, says: “We don’t expect Australian housing values to stabilise until rates find a ceiling. The timing of a peak is highly uncertain but could potentially be as early as late this year or through the first quarter next year.”

At an appearance at the Economics Legislation Committee in Canberra last month, Steven Kennedy, secretary to the Treasury, said inflation is expected to peak at 7.75% this month before gradually easing to 3.5% by June 2024.

Despite housing values being in an adjustment phase, we at Ouwens Casserly believe that the long-term trend remains positive as all our markets experience strong buyer demand.

 

If you are looking to buy, sell, lease or have your property managed, reach out to one of our specialist property consultants here within the OC team.

Disclaimer: Information in this blog is accurate at the time of publication. Ouwens Casserly has relied upon information from external sources in compiling this publication and does not warrant its accuracy or completeness. Please verify details and consult your agent before making any decisions.