Land price growth across Adelaide is expected to ease over the next year, a new Oliver Hume report reveals.
Limited available greenfield land to build homes on across Adelaide coupled with slower population growth are expected to ease price rises over the next year, a new report reveals.
The Oliver Hume Land Index and Residential Outlook is a quarterly analysis of Australia’s major city land markets to offer a forecast for sales and price movements over the next year.
Each city is scored between zero and 10 based on supply and demand, market sentiment and price trends, with five indicating a balanced market.
Adelaide’s overall score fell from 6.5 to 6.1 in the March quarter, but it remained above long-term average levels.
While demand for land across Adelaide remained strong, infrastructure-related supply constraints held back sales volumes in over the quarter.
The Oliver Hume Land Index and Residential Outlook offers a forecast for sales and price movements over the next year.
There were 373 sales recorded in the three-month period, the report showed, a 31.6 per cent drop from the previous quarter.
Meanwhile, price growth remained high, with the median land value climbing 11.3 per cent over the quarter to $417,500, leading to house and land prices being relatively more expensive compared to the established market.
Oliver Hume chief economist Matt Bell said while price growth would remain high, it was expected to ease based on a few factors.
“We expect demand to ease as population growth slows,” he said.
“Volumes are likely to remain largely stable in the face of this easing demand and ongoing supply challenges.
Oliver Hume chief economist Matt Bell. Picture: Supplied.
“Price growth will remain high but is expected to ease closer to current levels of established market price growth and the relatively high prices of new house and land.
“The outlook for established house price growth is for some easing in price growth as Adelaide is currently historically expensive compared to other national housing markets and is producing new dwellings at a relatively high level compared to underlying demand.”
Oliver Hume chief executive Julian Coppini said the price difference between new and established homes may begin to have a greater impact on the market over the next year.
“More than 30 per cent of the increases in land prices in the last year have made new house and land relatively expensive compared to the established market, and an easing of price growth in the existing market could worsen that comparison,” he said.
Turner Real Estate chief executive Emma Slape. Picture: Brad Griffin.
Turner Real Estate chief executive Emma Slape said interest rate hikes as well as new changes to capital gains tax and negative gearing were already slowing the market.
“It’s just a really tricky time at the moment,” she said.
“What we’re definitely seeing is a slow down in activity right across the board – people are happy to wait and see.”
Ms Slape said many investors would turn to new builds because of the tax advantages, which would impact both the land and established home markets.
“Having different options in the market place is only a good thing,” she said.
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