New housing in Campbelltown. Photo: Tony Lewis/InDaily
The Adelaide real estate market is experiencing a surge in activity, with properties hitting the market even during what is traditionally considered a slow period for sellers. Rising interest rates have created unpredictability, prompting homeowners to make strategic decisions. While some are reducing their property portfolios to capitalize on past growth, others are downsizing due to the financial strain caused by high mortgage payments.
Rising Repayments and Financial Struggles
Many homeowners are grappling with the burden of increasing repayments. The impact of rising interest rates is evident, with some individuals now paying significantly more than they were just 18 months ago. For example, one staff member who owned a unit with a $250 weekly mortgage payment is now required to pay $470. These financial challenges are forcing individuals to reevaluate their housing situations and consider selling properties they can no longer afford.
Healthy Prices in Popular Areas
Despite the hurdles created by rising interest rates, houses in sought-after areas such as Belair, Blackwood, Colonel Light Gardens, Lower Mitcham, and Panorama continue to command healthy prices. In fact, the market has recently witnessed the sale of several properties at record prices, with homes in Belair and Blackwood fetching $2 million. However, buyers are becoming increasingly cautious when it comes to properties that require extensive renovation work. They are wary of the rising costs and time associated with such projects.
The Rise of the "Bank of Mum and Dad"
One significant change in the Adelaide housing market is the increasing reliance on parents and grandparents to help first-time buyers enter the housing market. The "bank of Mum and Dad" has become very active, with many parents providing financial assistance to their children in various ways. Whether it's a gift, a loan, or acting as a guarantor for a loan, parental support has become a common trend in the current real estate landscape.
Housing Gap and Public Housing Initiatives
Despite the influx of people moving to South Australia, the ongoing shortage of housing has led to a widening wealth gap. The demand from a growing population has outpaced the availability of houses for sale or rent, exacerbating the affordability crisis. To address this issue, the SA Greens have proposed a plan to raise funds for public housing by taxing property owners who keep their houses vacant for more than six months. They estimate that such a tax could generate up to $220 million annually, enabling the construction of approximately 1760 new homes.
Construction Demand and Challenges
The demand for construction in South Australia shows no signs of slowing down. The building industry has experienced intense demand for home renovations and new builds, partly fueled by the state government's decision to cut stamp duty for first-home builders. Despite recent challenges in material supply and labor shortages, the construction industry is determined to meet the demand. However, build times have increased, with the average length now taking about a year compared to the pre-COVID timeline of nine months.
With strong demand for construction projects and homeowners eager to have work completed before the holiday season, tradies are feeling the pressure. Safety becomes a major concern during this time, as exhaustion and tight deadlines pose risks.
Looking ahead, the Adelaide real estate market is expected to remain resilient. Factors such as the stamp duty changes, government initiatives to promote new housing, and the commencement of construction on the new Women's and Children's Hospital contribute to the positive outlook for the industry. However, the ultimate stability of the market will depend on global events and the ability of the state to accommodate the increasing population influx.
Note: The information provided in this article is based on expert insights and trends within the Adelaide real estate market. It is crucial to consult with professionals and conduct thorough research before making any financial decisions.
