Adelaide’s land prices continued to rise in the June quarter, with the median price of a block of land surging past the $200,000 mark for the first time.
According to real estate firm Oliver Hume, Adelaide land prices increased by 8.5 per cent in the 12 months to the end of June to be at $465 per square metre for an average 450sq m block.
Key greenfield markets in and around Adelaide all recorded positive growth for the year, including the Barossa up 4.9 per cent, Gawler up 18.3 per cent, Mt Barker up 15.1 per cent and Playford up 10.9 per cent.
Oliver Hume head of national research George Bougias said the city’s land market mirrored the established home market with healthy price growth in the June quarter persisting despite interest rate rises.
Bougias said Oliver Hume, historically holding a strong presence in Victoria and Queensland, had expanded into South Australia last year to take advantage of growth opportunities.
“Like all markets, we’ll see a slowing of sales volumes as buyers reassess their borrowing capacity and other considerations,” Bougias said.
“Over the medium and long term, we should see steady growth underpinned by a strengthening economy and a return to steady population growth.”
Together with south east Queensland, Adelaide’s greenfield market is now one of the healthiest in the country with relatively good affordability and a healthy supply of stock coming to market.
While prices have increased in the recent cycle and are around peak levels, affordability is expected to be the dominant factor in the attractiveness of the Adelaide market, with land considerably more affordable than many other markets around the country.
The Reserve Bank of Australia’s decision to increase interest rates in May did impact sales volumes over the following months, but they have remained above long-term averages with nearly 1000 homesites sold in the June quarter, compared to 800 in the previous three months.
At the current rate land sales over 2022 will be short of the 5500 recorded over 2021, up 3900 sales on the previous year, as the impact of the federal government’s Homebuilder scheme flowed through the market.
The 5500 lot sales last year represented a 130 per cent above the seven-year average. The result also propelled Adelaide’s greenfield market to 7 per cent of land sales nationally last year, up from a historic average of 5 per cent.
The median size of lots transacted has steadily declined over the past two years as higher prices have forced buyers to adjust budgets and preferences. At the end of June, the median lot size for Adelaide was 450sq m.
Further supporting Adelaide’s greenfield market is the fact the city now holds the crown as the tightest rental market in the country, with a vacancy rate of only 0.3 per cent—making it an attractive location for yield and capital-growth-hungry investors who are looking to grow their portfolios.
Data from Corelogic showed house prices across the country dropped by 1.6 per cent in August.
Sydney experienced the biggest fall with values declining 2.3 per cent, while Brisbane dropped 1.8 per cent, Melbourne dipped 1.2 per cent and Canberra and Hobart both fell 1.7 per cent.
Adelaide and Perth slipped into the negative territory for the first time this year with falls of 0.1 per cent and 0.2 per cent respectively.
Adelaide dwelling values climbed by 357 per cent or 5.2 per cent average annual growth during the past 30 years.
