Momentum Builds in South Australian housing market, pointing to a strong 2021
Beautiful Adelaide is finally coming into its own as a desirable real estate market.
By October 2020, in South Australia we witnessed a surge in property prices which has continued to increase into 2021, crushing experts’ predictions of a year of doom and gloom both globally and nationally.
Australia’s housing market finished the year on a strong footing with CoreLogic’s national home value index rising a further 1% in December; the third consecutive month-on-month rise following a more than -2% drop in dwelling values between April and September.
Australian home values finished the year 3% higher with regional housing values rising by more than 6%, a rate of capital gain that was more than three times higher than the combined capitals, where home values were up 2% over the year.
In South Australia this has meant an increase in sale prices across the board, it has also meant that the length of time on the sales market has decreased considerably.
This has been due to several factors; one is that there is less housing stock because sellers have been unsure as to whether to sell their property or wait.
CoreLogic’s research director, Tim Lawless, said the year was characterised by a mild COVID dip in values, but unprecedented volatility in the transaction space.
In retrospect, the rebound in housing market activity and dwelling values is unsurprising given the rapid and substantial monetary and fiscal response from the Government and policy makers. “Record low interest rates played a key role in supporting housing market activity, along with a spectacular rise in consumer confidence as COVID-related restrictions were lifted and forecasts for economic conditions turned out to be overly pessimistic. Containing the spread of the virus has been critical to Australia’s economic and housing market resilience,” Mr Lawless said.
As remote working opportunities became more prevalent and demand for lifestyle properties and lower density housing options became more popular, regional areas of Australia saw housing market conditions surge. “Regional housing markets had generally under performed relative to the capital city regions over the past decade, but 2020 saw regional housing values surge as demand outweighed supply,” said Mr Lawless.
What is contributing to buyer’s confidence?
- The low Australian dollar is attracting strong overseas buyer interest/ Australian expats buying and moving back to South Australia
- Record level of government stimulus continues to support buyer sentiment
- Interest rates are record low. The consensus amongst economist is that they will remain at low levels for the foreseeable future
- Interstate buyers are moving to South Australia
- Low number of properties on the market
The Reserve Bank of Australia has decided to keep the official cash rate to its lowest ever rate of 0.10%.
The official cash rate affects lenders’ borrowing costs on variable rate loans. Lenders typically pass some of this cut onto borrowers, so a lower cash rate should mean cheaper variable rate home loans. Borrowers who opt for either fixed or variable rates are benefiting incredibly low interest rates right now. Banks and lenders remain supportive of lending for residential property.
The lure of Australia globally will rise too, because of our success in controlling the pandemic, the health care on offer, the lifestyle, and the climate.
Such optimism has been buoyed by some eye watering price growth, despite the imminent end of government stimulus measures. Consumer sentiment remains bright, with the economy powering back more strongly than expected, and unemployment remaining lower than imagined.
If you are thinking of selling, now is the time while the demand is far greater than the supply.
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