Market Update
We have seen a few shifts in the market over the past few months and while we are still enjoying a very strong real estate market, some different shapes are emerging in both the rental and sales sectors.
Rental Market
Property Managers tend to experience shifts in the market firsthand, several months before the public are made aware, largely because industry reports rely on data collected quarterly and, in the real estate industry, a lot can happen in three months.
Recent reports are now backing up what we have been telling our clients for some time, making it evident that there has been a slight softening in rental prices. More noticeably at the top end ($700-$1500 p.w.), but subtly across the board, rental growth has slowed, and rates are no longer leaping ahead in bounds. The good news is, with an under supply of housing and a tight rental market, prices in SA are still slowly growing. With this change in trajectory, landlords and agents have been forced to adjust their upward reach and meet the market. We are still applying small increases at the time of re-letting with good results, however numbers at open inspection have reduced significantly from this time 2 years ago.
This softening in the market is not just local to SA. As reported by Domain recently, “For the first time in years, quarterly rent prices have fallen in several Australian capital cities. Domain has revealed that rental price growth in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth – has weakened over the June quarter. In most major cities, rents are either declining, increasing at a more modest rate, or have frozen altogether. The June 2024 quarter was the weakest quarter for house rents since 2020 for Brisbane, Adelaide and Perth.” Declining overseas migration is helping ease rental demand, with Domain reporting that “the number of prospective tenants per rental listing has consistently fallen throughout 2024”.
In Adelaide, “quarterly growth is now at its lowest in four years and annual gains are at their lowest since March 2022.” However, while growth may have slowed, rental prices in SA are still moving and Domain found that, although the pace has shifted significantly, the record-breaking stretch of rental growth continues and units in particular are now proving to show strength.
Sales
House prices across SA remain strong and continue to grow, despite a series of interest rate hikes and gaining economic pressures. This may be largely due to record low stock being released on to the market, keeping competition amongst buyers high and prices strong, as well as mining sector growth and relative affordability compared with other states.
In September this year, the REISA reported South Australia to have “… posted a 1.83% median house price increase from the previous quarter and a 13.50% increase from the same quarter last year”, proving that the South Australian real estate market is still on the move, and one of the strongest markets for growth in the nation, along with Perth and Brisbane (REB November 2024).
Online publication, REB, reported recently that Adelaide’s auction clearance rates are still very strong - in many cases, proving to be some of the strongest in the country.
After a few years of unprecedented house-price rises, we have noticed firsthand that units have now gained significant strength, as first homeowners have been priced out of the market and are turning to more affordable real estate. Where the unit market is heading is yet to be seen, but it’s an exciting time - and one worth sitting on patiently. With units on the move, it’s the ideal time to hold on and enjoy the capital growth that is ‘in the making’. It appears that this journey is just beginning, and unless personal finances dictate otherwise, the savvy investor will recognise that now is the time to look to the future and retain your investment property, in order to fully realise the rare growth that is not showing any signs of slowing.
If this strength in market has inspired you to look at purchasing another investment property, feel free to call our team at Mayo’s for any property related matters. We are here to help with rentals and sales at any time.
Phone: 08 8362 9991 (Mon-Fri, 9am-5pm), or call us on our mobiles.