House prices on the rise in Adelaide’s metro south

Adelaide house prices increased by just 0.3 per cent over the September quarter, according to the latest data from Domain.

Although a relatively small increase, the latest result was nonetheless positive for the local market, consolidating the strong price growth of the previous two quarters.

Adelaide’s median house price has increased by 4.9 per cent over 2015 so far, compared to 3.1 per cent over the same nine-month period last year.

The Adelaide result is behind only Sydney and Melbourne for capital city house price growth in 2015 to September.

Although the Adelaide median house price increased marginally over the September quarter, only the metro south suburban regions recorded price growth – increasing by a strong 2.4 per cent.

Metro south has also recorded the highest rate of growth over the past year, with the median house price increasing by 5.3 per cent.

Next best result over the year was metro west,  up 3.7 per cent; metro north, up 1.6 per cent; and metro east, where annual median house prices have increased by 1.1 per cent.

Adelaide’s metro north is the most affordable suburban region, with a median house price over the September quarter of $320,000, followed by metro south, $409,500, metro west, $466,000, and metro east the most expensive at $550,000.

Recent solid housing market activity in Adelaide will, however, be impeded by the recent actions of  financial regulators that have resulted in rate increases to investors and owner-occupiers that may undermine the local markets’ prospects of a near-term recovery.

Lower levels of activity from the property market can only have negative impacts on the economy.

Reduced spending capacity by consumers and declining confidence heading into the pre-Xmas trading period also will not be welcomed by retailers.

Latest ABS data reports that the Adelaide jobless rate decreased from 7.8 per cent to 7.6 per cent over September, with the number employed falling sharply by 2444 over the month.

Despite the fall, Adelaide continues to record the highest jobless rate of all the capitals, with the next highest, Melbourne, well below at 6.3 per cent.

The national economy continues to underperform with similarly disappointing ABS job market data for September and lower-than-expected inflation data reflecting a largely stagnant economy.

The global economy is also showing increasing signs of decline, with growing concerns particularly over the performance of China.

The Reserve Bank will be likely to take this into account when it next week determines the direction of official interest rates over November.

The rapid decline in Sydney and Melbourne house price growth levels over the September quarter as revealed by Domain last week is also a factor the bank is likely to consider.

– Dr Andrew Wilson is Domain Group senior economist.

Published on INDAILY website Thursday November 05 2015