21/12/2023
Dear Clients, Colleagues, and Friends,
I hope this message finds you well. Following our recent winter briefing, I'd like to provide an update on the current state of the residential and commercial property market in South Australia as we approach the New Year of 2024.
Over the past 12 months, we've observed a noteworthy increase in interest rates, with a cumulative rise of 1.25% to the base rate, bringing it to 4.35% per annum as of December 2023. This change, coupled with other market dynamics, has influenced the South Australian real estate landscape.
Residential property values have experienced a significant surge in the past 18 to 24 months, resulting in an average median house price surpassing $700,000. Homeowners within a ten-kilometre radius of the CBD have seen substantial tax-free gains, averaging $4,000 per month. This has led to a decrease in property listings by 30%-40% compared to previous years, with owners opting to ride the wave.
The influx of interstate and overseas buyers has created competitive market conditions, with instances of vendors walking away with considerable profits exceeding fair market prices. This trend is expected to persist into the New Year, particularly as we see a rise in downsizing among the baby-boomer population in well-established areas like Norwood, Burnside, Unley, and Mitcham Council.
On the commercial front, prime properties within a ten-kilometer radius of the CBD are experiencing increased demand. Yields for securely leased commercial properties range from 3.5% to 6%, depending on location, lease duration, and tenant strength.
Due to recent tightening of the Residential Tenancy Act, most investors are opting for professional property management. Additionally, a number of investors are shifting their focus towards longer-term commercial investments, where tenants in addition to rent pay statutory outgoings.
Looking ahead, the next three to five years in South Australia are expected to reflect the current market trends. Adelaide's global recognition as a desirable city to live in, coupled with the influx of IT businesses and international relocations, continues to drive demand for well-located residential and commercial properties.
For any inquiries or advice on market trends, current sales or lease of both commercial and residential properties, please feel free to contact me.
My phone number: 0412 818 208
My email: [email protected]
Wishing you all a safe and relaxing festive season,
Nathan Fox and the Smallacombe Team