Long-term buyers leveraging current market conditions in Adelaide

More choice and listings are available for property buyers taking a long-term view.

Buyers taking a long-term view

With an average holding period of over a decade for house buyers these days, long-term investors are leveraging on the current market conditions. Since September 2003, capital city detached house prices have delivered 5.8 per cent per annum compounding capital growth, based on a weighted average measurement across Australia’s eight capital cities.

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Over the same time period, attached dwelling prices have delivered capital growth of 4.2 per cent per annum.

Figure 1 – Capital city residential property price indexes
Figure 1 – Capital city residential property price indexes

History shows that while the capital city markets move in cycles, over time they have delivered solid price appreciation on top of the annual rental income.

Buyers taking a long-term perspective have an opportunity in the current market conditions to negotiate a good deal, with less competition from other buyers compared to what we experienced in 2021.

Temporary housing market slowdown

The outlook for the Australian economy is strong, with the unemployment rate expected to drop to half-century lows of below 4 per cent. As we previously anticipated the unemployment rate is already down to just 4 per cent, which is as low as we have seen since the 1970s.

Figure 2 – Australian unemployment rate
Figure 2 – Australian unemployment rate

Furthermore, based on historical trends, it’s entirely possible that the unemployment rate could yet fall to 3 per cent or even lower, ultimately resulting in rising household incomes.

Figure 3 – Job vacancies versus unemployment rate

While there is currently a slowdown in property market conditions, this is likely to only be a temporary situation. Previous cycles have shown that those who buy well are delivered excellent results.

Quality is key

A shortage of rental properties is likely to characterise the property market over the years ahead, but buyers would need to focus on quality stock and negotiate well to get the best results. The easy gains for this cycle have passed.

Buyers need to focus on quality stock to mitigate risk. An A-grade house on a good, family-friendly street with little noise disturbance is the ideal asset. But unless you have a strong budget then you may well be looking away from Sydney, Melbourne, and Brisbane. We recommend investors take a look at the market in Adelaide.

The economy has been sluggish in Adelaide over the past dozen years, and the housing market returns have been steady rather than spectacular. But it’s hard to ignore the value proposition now that rental vacancy rates are tightening so dramatically.

The timing for Adelaide looks good.

SuburbStatePostcodeMedian house price ($)12-month price growth (%)
KilburnSA5015$472,50028%
Christies BeachSA5165$460,00018%
Hallett CoveSA5158$600,00015%
SeafordSA5169$595,00030%
MoanaSA5169$580,00021%
SemaphoreSA5019$925,00010%
Semaphore ParkSA5019$650,00014%
ExeterSA5019$722,50030%
ModburySA5092$491,00012%
Valley ViewSA5093$521,00023%
Figure 4 – Top 10 suburbs for Adelaide investors

If you want to look at other areas or budget price ranges, check out our Where to Buy tool, which has an algorithm for helping buyers decide where and what to buy.

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