Date: 2021-20-02 22:34:34
Adelaide's housing market had often been considered an affordable option when compared to the eastern states, but buyers are becoming bewildered at the increasing price of property and level of competition.
Late last year, Adelaide's median house price reached a record high, peaking at $510,000, and so far this year, dozens of properties in various suburbs have exceeded expectations at sale.
"The median price has reached a new record high and the volume of sales has significantly increased across metropolitan Adelaide and the entire state," the state's Real Estate Institute stated in its December quarter report.
With supply down and demand up, and properties selling for tens of thousands of dollars above the asking price, Adelaide has become a seller's market.
Experts say the reasons for the price boom include fewer listings, higher levels of interstate interest, the impact of coronavirus on disposable income, a partial reversal of the so-called "brain drain", and South Australia's comparative success in dealing with the COVID-19 pandemic.
Market analyst Kevin Brogan, from property advisory firm Herron Todd White, said there had also been a fall of around 11 per cent in new listings in Adelaide in the past 12 months, which was driving higher prices.
"The demand at the moment hasn't really been met by significant new supply coming online," he said.
"Compared to this time last year, we've probably got fewer sellers bringing their properties to market."
While Adelaide's property market remains considerably more affordable than Sydney and Melbourne, Mr Brogan said sellers had the advantage.
"We generally have a much more stable market, we're not that given to market volatility, so we don't see quite the same spikes and troughs that you'll see in some of those eastern capitals," he said.
"But at the moment the market in Adelaide has shown tremendous resilience through the coronavirus pandemic."
Real Estate Institute of SA chief executive Barry Money described what was occurring in the South Australian capital as a "mini-boom".
"There will be some very happy sellers out there," Mr Money said.
Agents are currently "busier than they've ever been", and Mr Money said Adelaide's traditional selling points — such as reduced commuting times — remained attractive to interstate investors.
"I think we are going to see, over the next 12 months or so, a pick-up of interstate investors in the market," he said.
"It's worth considering selling your property at this point in time because of the level pricing has reached."
Recent house-hunter Brooke DuBois said she was among the lucky ones, having purchased a home just before Christmas.
She said by the time she and her husband Jeremy made the purchase, they were at the end of their "tether".
"In the beginning we thought we might get a bargain here, if people are wanting to sell quickly — perhaps feeling a little bit nervous in a COVID environment — but we realised pretty quickly that wasn't going to happen," she said.
With a second baby on the way, Ms DuBois and her husband were keen to move closer to work and to Adelaide's CBD, and started house-hunting in late 2019.
Little did she know they would end up attending hundreds of open inspections, and putting in several unsuccessful offers — including one about $7,000 above the top end of the asking price range.
"We were looking and looking and just getting blown away by how many people were in the same situation as us," she said.
"Every open inspection — quite often you'd have people lined up around the block and you'd get the same people at each inspection.
"Everyone in our position was fighting for the few houses that were available … you could tell how hungry the buying market was."
She said it took months of searching, dozens of weekends attending inspections, and three unsuccessful offers before she finally managed to land a successful bid.
"We missed out on three different homes we put offers on. A couple of times we upped our offers," Ms DuBois said.
"It probably did get harder, but at the end we were just frustrated and chucking an absurd amount of money at things and still missing out."
Ms DuBois has now moved her family into their new home at Blackwood, in the Adelaide Hills.
"We really loved it and decided to go hard on this one. We went above the asking price and nabbed it," she said.
Some properties in Adelaide are currently selling for more than $100,000 in excess of the asking price.
A property at Maylands with a listed price guide of $850,000 recently sold at auction for $1.08 million, while another at Prospect listed at $900,000 attracted a successful top bid of $1.13 million.
Accompanying the higher prices is a drop-off in listings — data shows the total number of listings for houses and units across Adelaide has declined dramatically in recent months.
According to investment research company SQM Research, there were 13,391 total listings in January 2021.
That represents a decline of about 26 per cent on the recent high of 18,139, which occurred just over 12 months earlier, in November 2019.
While Victorian Premier Daniel Andrews generated headlines when he publicly questioned why anyone would want to come to South Australia, the festival state is proving popular with young professionals.
"South Australia would appear to be a remarkably affordable market compared to some of the alternatives in the eastern states," Mr Brogan said.
He said several factors were driving the trend, including historically low interest rates and government stimulus funding in response to the pandemic.
But he said South Australia's comparatively strong track record in handling coronavirus outbreaks was also attractive to interstate buyers.
"The fact that we have had effective mitigation measures when they're required has actually enhanced Adelaide's reputation amongst interstate purchasers," he said.
"The 'brain drain' where young and highly qualified people leave South Australia tempted to the eastern states by what they perceive to be greater opportunities — there's a reasonable rate of those people returning."
Mr Brogan said wealthier investors had more disposable income at the moment, which was also driving up prices.
"I've certainly seen numerous examples in markets like Byron Bay and the Sunshine Coast of precisely that — in upper income brackets, people making an annual allowance for overseas travel et cetera are now actually finding an alternative purpose for those available funds," Mr Brogan said.
Ms DuBois said she was surprised to see huge levels of interest from prospective buyers interstate while she was house-hunting.
"A lot of the open inspections, you had people going around on FaceTime or Zoom or whatever with their phones just showing someone on the other end of the line into all the rooms," she said.
"That was really common, which made us think there were a lot of really brave people putting offers on things without ever seeing them."
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