Adelaide Property Market Update – July 2013

July 24, 2013

Residential Property Market Update

With the 2012/13 financial year over lets take a look at where things are at with the residential property market in Australia and more specifically Adelaide.

Homebuyer confidence and investor demand are both actually on the rise. Sure we’ve seen benchmark interest rates fall to their lowest level on record, the broader job market is subdued, and housing activity has stagnated. But more recently, new data has provided a fresh outlook for economists, homebuyers, investors and mortgage holders alike.

In the latest Home Finance Index, 49.8 per cent of those surveyed believe residential prices will rise over the next quarter – double the percentage recorded in March 2012. In addition, the number of active buyers likely to be in the market for a home loan over the next year has jumped by almost 50 per cent, from 12.7 per cent of respondents to 18.9 per cent.

Providing further evidence of the strength of the Australian property market, credit demand is on the rise. According to Veda’s Quarterly Credit Demand Index, overall demand for credit increased by 4.7 per cent in the past year, the strongest rate of annual growth since the global financial crisis. This new data provides encouraging insight into the re-emergence of consumer confidence and the strength of the Australian property market.

The good news is that mortgage enquiries are on the rise indicating the current upturn in house prices is likely to have further to run. House prices are being supported by low interest rates, improvements in affordability and solid population growth.

RPData has also just released their latest monthly housing market update report. It’s probably the single most accurate and concise piece of information you’ll read on the status of the property market in Australia and Adelaide. If you want to read the full report complete with charts and graphs click here otherwise here are the key take home points;

National Property Market

Across the capital cities, dwelling values have increased by 3.8% over the 2012/13 financial year compared to a -3.6% fall in values over the 2011/12 financial year.
Capital city home values have increased by 0.2% over the three months to June 2013, following a 2.8% increase in values over the three months to March 2013.
Across the combined capital cities, values are currently -2.9% below their October 2010 peak.
Housing market conditions across the combined capital cities have been improving since May 2012 after a 7.4% peak to trough decline which lasted nineteen months.
Capital city property values have increased at an average annual rate of 4.5% over the ten years to June 2013. [Adelaide 5.2%]
Capital city values have increased at an average annual rate of 2.4% over the five years to June 2013. [Adelaide 0.6%]
Across the combined capital cities weekly rents sit at $478/week for houses and $444/week for units.
Capital city rents have increased by 3.2% for houses and by 2.8% for units over the past 12 months.
Rental yields are currently recorded at 4.2% for houses and 4.9% for units.
Private treaty indicators suggest buyers are losing some leverage as home sell faster and vendors offer less discount.
Auction clearance rates are currently at their highest levels in three years.
Effective supply levels are improving as listings fall and sales volumes increase.

Adelaide Property Market

Home values have risen by +1.2% over the past 3 months in Adelaide.
Home values in Adelaide have increased by 0.2% over the twelve months to June 2013.
Since the Adelaide market started on a recovery trend in July last year values have risen by 2.7%.
House values have increased by 0.2% over the past year compared to a -0.4% fall in unit values.

General Economic Update

Inflation sits comfortably in the middle of the RBA’s target range but has slowed markedly over the past six months.
Economic growth was fairly steady over the March 2013 quarter.
The Reserve Bank board keeps official interest rates on hold in July at 2.75
Unemployment rate eases slightly to 5.5% in May from a revised 5.6% in April 2013.
Consumer sentiment rebounds in June and is now showing slightly higher levels of optimism than pessimism.
Consumer sentiment has a significant influence on sales transactions and movements in home values.
Consumers continue to show a preference for saving their money rather than spending.
The proportion of fixed rate mortgages is rising as consumers take advantage of low fixed rates.
Dwelling approvals have been trending higher over recent months.
Overseas migration is continuing to ramp up, fuelling stronger population growth.