Adelaide’s property market is so hot that not even an interest rate hike could slow it down, a local buyers’ agent says.
Propsavvy buyers agency founder Cory Harding said the city’s shortage of available properties coupled with strong demand, particularly for affordable homes and developable land, would ensure some areas of the market remained “hot” following a rise.
In fact, he said a hike could fuel it further.
Many buyers would turn to more affordable options as borrowing capacities were reduced, Mr Harding said, while developers would find it harder to build more homes because their holding costs would go up.
MORE: Rate rise adds hundreds to repayments
The RBA has increased the cash rate 25 basis points to 3.85 per cent.
His comments come as the Reserve Bank rose the cash rate 25 basis points to 3.85 per cent for the first time in two years after inflation rose 3.8 per cent over the year to December.
The RBA’s target range for inflation is 2 to 3 per cent.
“Do I think it will slow down the market? I don’t see that happening,” Mr Harding said in a social media post.
“I still see plenty of people trying to get into the market.
“The affordability end, for not only investments but also for owner occupiers, is still ridiculously hot.
“For example, recently I’ve seen properties on the market that have had 30 offers on them and they’re all in the mid to high $700,000 mark, still selling $50,000 to $80,000 higher than the advertised price.
“It’s also why we’re seeing units in premium spots also growing drastically because that kind of market would rather downgrade the dwelling type than downgrade the location.”
Mr Harding said demand for developable land, affordable homes attractive to first-home buyers and units in premium areas would continue to drive growth despite a rate rise.
“They’re the three markets that are doing really, really well,” he said.
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The increase isn’t expected to have too much of an impact on Adelaide’s market, a buyers agent says.
“I’m still noticing plenty of people at opens.”
Properties under $850,000, or $900,000 in some areas, were considered affordable, Mr Harding said, while those in the $1.2m to $2m bracket were “no-man’s land”.
Meanwhile, executive general manager at global data, analytics and technology company Equifax Moses Samaha said a rate increase could also drive many people to refinance.
“In 2022, the reaction to the first rate hike was immediate,” he said.
“As soon as rates rose in May 2022, refinance volumes lifted 25 per cent compared to the previous month.
“Mortgage holders moved quickly to secure rates before further increases, and that activity stayed roughly 15 per cent above the April 2022 baseline for the following six months.”
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