Urgent Warning for Adelaide Property Market

Summary

Adelaide's housing market has seen a significant surge, with the median house price exceeding $900,000 for the first time. Despite predictions of flatlining, property prices have risen by 14.4% year-to-date, with the fastest growth rate since May 2022. Rental vacancy rates are at an all-time low, indicating a severe undersupply of rental accommodation. The South Australian government's recent abolition of stamp duty for first-time home buyers and extension of the first-homeowner grant are expected to further stimulate demand. However, this may exacerbate the housing shortage and drive prices higher, emphasizing the need for strategic property investment and due diligence.

Takeaways

• 🏡 Adelaide's median house price has soared above $900,000 for the first time.
• 📈 Property prices in Adelaide have increased by 14.4% year-to-date.
• 🚀 The rate of price growth in Adelaide is the fastest it has been since May 2022.
• 🏠 Adelaide has the lowest rental vacancy rate among all Australian capital cities.
• 📊 Adelaide's long-term average vacancy rate shows the biggest undersupply of rental accommodation.
• 📉 Some areas in Adelaide, like Woodville West and Kilburn, have seen property prices drop.
• 💼 South Australia currently has the lowest unemployment rate in the country.
• 🥇 South Australia's economy was recently ranked the best in the country for the first time in 15 years.
• 🏘️ The South Australian government has abolished stamp duty for first home buyers building new homes.
• 🔮 Adelaide property prices are expected to continue rising due to a combination of housing shortages, economic strength, and government incentives.

Q & A

What is the current situation with the median house price in Adelaide?

Adelaide's median house price has reached over $900,000 for the first time, marking a significant increase and making the dream of buying a home increasingly unaffordable for many.

What was the initial prediction for Adelaide's property market at the start of the year?

At the beginning of the year, there were predictions that house prices in Adelaide would remain stable or 'flatline', contrary to the current soaring prices.

How has the rate of property price growth in Adelaide changed recently?

The rate of property price growth in Adelaide has been accelerating, with the last 3 months showing the fastest growth since May 2022.

What does the rental vacancy rate indicate about the Adelaide property market?

Adelaide has the lowest rental vacancy rate in the country, indicating a high demand for rental properties and a potential undersupply of housing.

How does the current vacancy rate in Adelaide compare to the long-term average?

The current vacancy rate in Adelaide is significantly lower than the long-term average, suggesting a substantial undersupply of rental accommodation.

What does the report suggest about the need for additional homes in greater Adelaide by 2050?

The report indicates that greater Adelaide needs an additional 300,000 homes by 2050 to meet the growing demand, highlighting the need for rezoning and construction to prevent a housing crisis.

What is the current state of building approvals in South Australia?

South Australia has the highest number of new building approvals, but it is not sufficient to meet the demand, indicating a need for more construction to address the housing shortage.

How have property prices in certain areas of Adelaide been affected recently?

While overall property prices in Adelaide are rising, certain areas such as Woodville West have seen significant drops in housing unit prices, suggesting market variability.

What is South Australia's current economic strength in terms of unemployment figures?

As of March of this year, South Australia had the lowest unemployment rate in the country, reflecting a strong job market.

What major policy change has the South Australian government implemented to boost housing supply and home ownership?

The South Australian government has abolished stamp duty for all first home buyers who build new homes and extended the first home owners grant, aiming to stimulate demand and increase housing supply.

What potential impact could the new policy of abolishing stamp duty have on property prices in South Australia?

The policy could lead to increased demand for properties as the savings from abolished stamp duty can be used towards deposits, potentially driving property prices higher due to the existing housing shortage.

What advice is given for potential property buyers in Adelaide considering the current market conditions?

Due to the variability in property price growth across different areas of Adelaide, potential buyers are advised to conduct thorough due diligence and consider areas with undersupply to make informed investment decisions.

Outlines

00:00

🏠 Adelaide's Housing Market Soars

The Adelaide property market has seen a significant increase, with the median house price surpassing $900,000 for the first time. Contrary to initial predictions of a flatline in prices, the market has experienced a 14.4% increase year-to-date, with the fastest growth rate since May 2022. The city has the lowest rental vacancy rate in the country, indicating a significant undersupply of rental accommodation. A report suggests that an additional 300,000 homes are needed by 2050 to meet the growing demand, highlighting the potential for a housing crisis if land is not rezoned. Despite the highest number of new building approvals in South Australia, the demand is still not being met.

05:02

📈 Boosting Home Ownership in South Australia

The South Australian government has introduced measures aimed at increasing home ownership by abolishing stamp duty for first home buyers who build new homes and extending the first homeowners grant. This initiative, part of the 2024-25 budget, is expected to cost $30 million over four years and remove property value thresholds for both the stamp duty exemption and the grant. The move is anticipated to stimulate demand, potentially exacerbating the existing housing shortage and driving property prices higher. The impact of similar federal government incentives in the past has been to increase national property prices, suggesting a similar outcome for South Australia. The summary advises that while the property market in Adelaide is set to rise, careful consideration is needed as certain areas are experiencing a drop in prices, and economic strength varies.

Keywords

💡Median House Price

The median house price refers to the middle value of properties sold in a specific area, which is a key indicator of the housing market's health. In the video, it is mentioned that Adelaide's median house price has risen above $900,000 for the first time, signaling a significant increase in the cost of housing and making it a central theme of the video's discussion on affordability.

💡Property Market

The property market encompasses all aspects of buying, selling, and renting real estate. The video discusses the Adelaide property market's performance, noting that it has been surprisingly strong with prices up by 14.4% year-to-date, which is a significant factor in the housing affordability crisis discussed.

💡Vacancy Rate

The vacancy rate measures the proportion of unoccupied rental properties in a given area. The script highlights that Adelaide has the lowest vacancy rate in the country, indicating a tight rental market and contributing to the housing shortage and price increases.

💡Rental Undersupply

Rental undersupply occurs when the demand for rental properties exceeds the available supply. The video points out that Adelaide has the biggest gap between the current and long-term average vacancy rates, suggesting a significant undersupply of rental accommodation and a key driver of housing price increases.

💡Housing Demand

Housing demand refers to the desire and ability of individuals to purchase or rent homes. The script mentions that greater Adelaide needs to build an additional 300,000 homes by 2050 to meet growing housing demands, underscoring the scale of the housing shortage.

💡Land Shortage

Land shortage refers to a situation where there is not enough available land to meet the demand for housing development. The video warns that South Australia could run out of land within 30 years if changes are not made to address the housing demands, which is a critical issue affecting the property market.

💡Building Approvals

Building approvals are official permissions granted for the construction of new buildings. The script notes that South Australia has the highest number of new building approvals, but it is not sufficient to meet the demand, indicating a gap between supply and demand in the property market.

💡Economic Strength

Economic strength is the overall health and stability of an economy, often measured by factors like employment rates and GDP growth. The video mentions that South Australia has the lowest unemployment in the country and was voted the best state economy, which could influence the property market by attracting more residents and investors.

💡Stamp Duty

Stamp duty is a tax that must be paid when purchasing a property. The video discusses a major policy change where the South Australian government will abolish stamp duty for first home buyers who build new homes, which is expected to stimulate demand and potentially drive up property prices.

💡First Home Buyers

First home buyers are individuals or couples purchasing a home for the first time. The script highlights a government initiative to abolish stamp duty and extend the first home owners grant to eligible first home buyers, which is aimed at increasing home ownership but could also exacerbate the housing shortage.

💡Supply and Demand

Supply and demand are economic principles that describe the relationship between the availability of a product and the desire for it. The video emphasizes that while there is a significant housing shortage in South Australia, the government's incentives for first home buyers increase demand, potentially leading to higher property prices due to the imbalance between supply and demand.

Highlights

Adelaide's median house price has reached over $900,000 for the first time.

Contrary to predictions of flatlining, Adelaide's property market has seen a 14.4% increase in property prices year-to-date.

The growth rate of Adelaide's property prices is the fastest since May 2022, indicating an acceleration in price growth.

Adelaide has the lowest rental vacancy rate among all capital cities in Australia.

The gap between the current and long-term average vacancy rates in Adelaide is the largest, indicating a significant undersupply of rental accommodation.

Greater Adelaide needs an additional 300,000 homes by 2050 to meet the growing demand driven by single-person households.

South Australia is facing a potential land shortage within 30 years if drastic changes are not made to address housing demands.

Despite having the highest number of new building approvals, South Australia is not meeting the housing demand.

Certain areas in Adelaide, such as Woodville West, are experiencing a drop in housing unit prices, almost 9%.

South Australia had the lowest unemployment rate in the country as of March of this year.

The South Australian economy was voted the best state economy in the country, overtaking Victoria.

The South Australian government has abolished stamp duty for first home buyers who build new homes and extended the first homeowners grant.

The abolition of property value thresholds for stamp duty exemption and first homeowner grant is expected to cost $30 million over four years.

The new scheme is likely to stimulate demand more than supply, potentially driving property prices higher.

Adelaide property prices are expected to continue rising due to a housing shortage, increased incentives for demand, a strong economy, and tight vacancy rates.

Investors are advised to conduct due diligence when purchasing property in Adelaide, as some areas are growing while others are struggling due to oversupply.

Transcripts

the dream of buying a home is getting

further Out Of Reach for many with

Adelaide's median house price soaring

above $900,000 for the first time the

adelay property Market has been a

surprise to many when the year started

there were predictions that house prices

in Adelaide would Flatline but now we're

starting to see headlines about Adelaide

property prices reaching a grim

Milestone so today I'm going to look at

what's been happening to house prices in

Adelaide what's expected and why and the

one event that's just happened that

could change everything for Adelaide

house prices let's dive in hello it's

Nero here and if you're new to my

channel hit that subscribe button

because I talk about all things related

to the Australian property market and

the economy the Adelaide property Market

has been one of our strongest performing

markets year-to date property prices are

up an astonishing 14.4%

but what's even more amazing is that

when we look at the rate of growth over

the last 3 months the rate of growth is

actually the fastest it's been since May

2022 so that means that the rate of

price growth in Adelaide is actually

accelerating here's why I expect

Adelaide to continue to have significant

price growth first of all when we look

at this chart which shows the rental

vacancy rates across all of our Capital

Cities you can see the gray line which

is tracking Adela vacancy rate is the

lowest in the country that's right

Adelaide has the lowest vacancy rate in

the country not Perth as so many media

Outlets might lead you to believe and

this isn't a new phenomenon either it's

actually been the case for quite some

time here's an article from back in

September so roughly nine months ago

showing that Adelaide already had the

lowest vacancy rate in the country back

then and what's really scary is that if

we look at this next chart which tracks

the difference between the current

current vacancy rate versus the

long-term average the blue dots are

showing the long-term average the red is

the current vacancy rate and what you

can see is that Adelaide right now has

not only the lowest capital city vacancy

rate in the country the gap between the

long-term average vacancy rate and the

current vacancy rate is the biggest of

all the states showing it has the

biggest under supply of rental

accommodation right now and this is

purely because there just aren't enough

properties in Adelaide for its growing

population greater Adelaide needs to

build extra

300,000 homes by 2050 as single person

households Drive crisis South Australia

could run out of land within 30 years

unless drastic changes are made to meet

housing Demands a landmark report has

found greater Adelaide needs another

300,000 homes to meet Demand by 2050 the

greater Adel Regional plan it's a

discussion paper identifies that while

there's enough land for additional

200,000 homes the state will run out of

land within 30 years without an ongoing

resoning program so what that tells you

is that Adelaide and South Australia

have a major problem they don't have

enough houses they're about to run out

of land if they don't rezone so even

though we are starting to see that South

Australia is the state that has the

highest number of new bu building

approvals it's nowhere near enough to

meet the demand of course whenever a

state is looking to increase Supply just

like the new South wal state government

is doing in Sydney and now the South

Australian government is trying to do in

Adelaide you need to be careful you

can't just buy anywhere because property

prices in Adelaide are rising the

fastest that they have in the last two

years you still need to do your due

diligence because there are certain

areas that are actually falling right

now we have seen houseing unit price

prices has achieved new record highs in

Adelaide but they're not going up

everywhere Woodville West has seen the

biggest drop almost 9% followed by

Kilburn in the Eastern suburbs

hectorville is becoming more affordable

and when you're looking at the economic

strength of South Australia let's have a

look at the unemployment figures as of

March of this year South Australia had

the lowest unemployment in the country

now I do expect these figures will

fluctuate especially as South

Australia's population continues to

increase and for the first time ever the

South Australian economy was voted the

country's best state economy an influx

of construction completions an

increasing number of new builds and a

strong jobs Market has seen South

Australia top the leaderboard when it

comes to economic strength the southern

state known for its food and wine

overtook Victoria to take out the top

spot in comsec's latest state of the

states report for the first time in the

survey's 15 year history and now there's

been a major shift by the south

Australian government that I expect will

lead to even more sustained property

price growth stamp Duty officially

abolished for all first home buyers who

build new homes the Malin osus labor

government will officially abolish stamp

Duty for all first home buyers who buy

or build a new home and extend the first

homeowners Grant to all eligible first

home buyers as part of the 2024 to 25

budget to further boost housing Supply

and help more south Australians into

Home Ownership the 2024 to 25 budget

will abolish property value thresholds

for both the stamp Duty exemption and

first homeowner Grant at a cost of $30

million over 4 years with the abolition

of property value limits a first home

buyer who purchase a new dwelling

broadly in line with the median house

price of

$750,000 will receive a benefit of over

$50,000 including the first homeowner

Grant of

$155,000 but do you remember what

happened to property prices when the

Scott Morrison federal government

decided to give incentives for people to

build homes it drove property prices

higher on a national level I expect

you're going to see something similar in

South Australia because although this

scheme might be intended to increase

Supply what it actually does is it

stimulates demand why because now now

someone doesn't have to pay whatever

they had to pay in stamp Duty that 10 20

$30,000 that can be put towards a

deposit to get a new home so it actually

allows more people into the market yes

that's great but when you already have a

massive property shortage in South

Australia having this sort of scheme

only increases demand even more than

Supply as I showed you earlier there

already is a shortage of land in South

Australia so you can have all these

people want to buy but if there isn't

enough land you have more demand than

Supply driving property prices higher so

ultimately what's a verdict on Adelaide

property prices are set to keep Rising

for quite some time yet on a broad level

we have a massive housing shortage there

we have increased incentives for demand

strong economy tight vacancy rates but

you can't just buy anywhere in Adelaide

certain areas will continue to grow

driven by the massive under Supply While

others will struggle because of over

Supply you need to do your due diligence

if you want help with that check out the

link in the description below to get

totally for free the audio version and

digital version of my book otherwise

I'll see you next time