Harris Real Estate have provided us with an update on the outlook of the Adelaide Property Market for 2021 where demand exceeds supply in both sales & leasing.
In March 2020, when Covid-19, was beginning to make an impact on Australia, it appeared that not only the Australian but the South Australian property market had come to a grinding holt as we all prepared for what was rumoured to potentially be the toughest real estate market we have ever seen. Looking back now, it’s clear to see that we were completely wrong and underestimated the Australian culture towards residential property.
Over the last 6-9 months we have seen property prices here in Adelaide continue to climb in an aggressive upwards trend with the median sale price growing by 5.9% over the last 12 months and 3.6% for the last quarter. What makes this so significant is that prior to this year the average annual growth cycle for Adelaide had been sitting at 1.7% per year for the last decade.
The big question on everybody’s lips is where to for property prices here in Adelaide for 2021. All expert advice leads to a continuation of the market that we are already experiencing due to 3 primary reasons:
- The lowest interest rates available in history
- 20% less stock available causing more competition for home buyers
- A Covid induced patriotism towards property as home owners look to upgrade / extend existing dwellings from excess household cashflow due to less lifestyle expenses.
The rental market has also been performing very well in Adelaide. Despite the challenges of 2020, the letting rate was constant with no shortage of well- referenced applicants. Housing rentals rose by 3.6% and units by 1.4%. Vacancy rates are falling in all areas except apartments & the city itself. This reflects both the volume of high-rise developments & high-density properties being less popular post Covid-19.
The outlook for 2021 for landlords is extremely positive. The year starts with a shortage of supply in most areas at the time of peak demand. Particularly houses in all inner-city areas are leasing very quickly. This has pushed rents up more than 5% in many areas. Prestige homes are also highly sort after as executive transfers have recommenced. It is now common for applicants to offer rent above the listed price or payment of rent in advance to secure a property.
Gross average yields in Adelaide increased to 4.3% compared to a capital city average of 3.4%. Coupled with low interest rates, this has made residential investments look very attractive. We have a growing number of qualified investors looking for opportunities.
One thing we can all be proud of as a nation is our incredible resilience. From the bushfires earlier last year to dealing with Covid-19 on an ongoing basis, we can be proud of the fact that we have weathered these situations as well as anyone. In SA this has meant that our solid property market, in both sales and property management, is here to stay.
This article was written by Phil Harris, Managing Director, and John Carey, Director of Property Management at Harris Real Estate.