By Herron Todd White
Springtime has historically been one of the strongest periods for market activity within metropolitan Adelaide. The market awakens from its slumber with an increase in both the supply of properties as vendors make use of the favourable weather conditions and demand from purchasers with pent up frustration from a lack of winter supply. State government data indicates that the metropolitan median house price has seen gains in the December quarter each year since 2008. It’s interesting to note that the decline in the 2008 December quarter coincided with the Global Financial Crisis which can be considered the last major global crisis prior to the COVID-19 pandemic.
Market activity has remained subdued in the shadow of COVID-19. Currently the number of new property listings is down 18.7 per cent from the same period in 2019. Buyer activity remains below 2019 levels, however the lack of stock continues to create a competitive market. Agents continue to report that stock is hard to come by but the stock they have is selling quickly. Auction clearance rates have remained steady, hovering around 60 per cent whilst days on market currently sits at 50 and 55 for dwellings and units respectively.
The South Australian market has been one of the only major capital markets to record gains, albeit minor, through the COVID-19 period. Gains of 0.3 per cent and 2.4% have been achieved over the past three months and 12 months respectively.
Both unemployment and underemployment remain a concern in South Australia. With near record highs of both, it remains unclear whether there will be suitable demand to soak up springtime supply.
In the current climate, markets and property types geared towards owner-occupiers are considered to provide the best prospects for market stability through the spring selling period. Buyers active in these spaces are typically seeking properties out of a need to either upsize, downsize or geographically relocate. Considered one of the most hotly contested owner-occupier markets is the $600,000 to $800,000 price bracket within the middle and inner rings. Within this market, the sales method of choice is typically public auction with character dwellings being the most sought after. Popular with these purchasers and providing increased stock levels in this price bracket are the suburbs of Prospect, Norwood, Parkside and Mile End.
Prospect is located 5.5 kilometres north of the Adelaide CBD and is characterised by turn of the century homes providing a mixture of allotment sizes. This suburb is serviced by the Prospect Road dining and retail precinct which has recently undergone a significant redevelopment. In the past 12 months, Prospect has had 56 sales settle in the $600,000 to $800,000 price range with 8 Pulsford Road being one of these. This property comprises a semi-detached character cottage disposed as two bedrooms and one bathroom on a 267 square metre allotment. This property achieved a sale price of $605,000.
Norwood is located 3.5 kilometres east of the Adelaide CBD and is characterised by a mixture of character homes and 1970s high density unit groups. This suburb is serviced by The Parade dining and retail precinct and provides direct access to the CBD via Kensington Road, The Parade and Magill Road. In the past 12 months, Norwood has had 23 sales settle in the $600,000 to $800,000 price range. Just listed for sale in this price bracket is 13 Margaret Street, a circa 1900s double fronted cottage disposed as three bedrooms and one bathroom on 330 square metres of land. Margaret Street is tightly held and popular with purchasers given its proximity to the hustle and bustle of The Parade.
Parkside is located approximately 2.5 kilometres south of the Adelaide CBD and is popular for its proximity to the CBD and its heritage appeal. The suburb is supported by the Frewville and Arkaba shopping centres and has access to the CBD via both Greenhill and Fullarton Roads. In the past 12 months, Parkside has had 19 sales settle in the $600,000 to $800,000 price range. The sale of 50 Wallis Street is a classic representation of typical Parkside stock. This property provides a detached, well-presented cottage disposed as three bedrooms and one bathroom on a 465 square metre allotment. This property achieved a sale price of $774,500.
Mile End is located approximately four kilometres west of the Adelaide CBD and is characterised by character homes on a mixture of allotment sizes. Price levels can fluctuate within the suburb as the western section is located only 1.8 kilometres south-west of the airfield’s main runway. This suburb is serviced by the Henley Beach Road shopping precinct and has direct access to the CBD via Henley Beach Road and Sir Donald Bradman Drive. In the past 12 months, Mile End has had 17 sales settle in the $600,000 to $800,000 price range. The recent sale of 79 Kintore Street provides a renovated and extended sandstone villa disposed as three bedrooms and one bathroom on an allotment of 442 square metres. This property achieved a price of $710,000
In addition to these historically buoyant spring markets, the homebuilders grant has provided a rocket to the building industry which has resulted in a significant increase in the broader market’s appetite for vacant land. CoreLogic data as at 31 July indicates that construction loans are up 18 per cent month on month and 35 per cent on the same period last year. With an abundance of available land and suburbs moving through varying stages of urban renewal, the middle ring has been the greatest beneficiary of this boost. Throughout the middle ring, available allotments vary in size from 300 to 450 square metres and range in price from $180,000 to $350,000. The suburb of Ingle Farm, located 14 kilometres north-east of the Adelaide CBD, had ten vacant land transactions in the month of July compared to only three during the same period in 2019. Similarly, Flinders Park located seven kilometres west of Adelaide had six vacant land transactions in the month of July compared to none in the same period in 2019.
This spring selling period will be like no other. The COVID-19 situation remains fluid which is creating obvious uncertainty in the market. Uncertainty is not a favourable fundamental to build a thriving spring market around. The market’s resilience has been proven over the past six months with reduced stock volumes. Both stock levels and days on market will be crucial statistics in the December quarter to see whether demand is matching typical spring supply. If we remain community transmission free of COVID-19 and avoid any further significant job losses, the market should remain stable through to the back end of 2020.
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