Adelaide Housing Market Bucks National Trend with Record Price Growth

Adelaide's housing market is bucking national trends, with median prices rising 4.8 per cent in the June quarter.

According to Domain's latest House Price Report, Adelaide's median house price is now a record $1.125 million, up from $970,165 a year ago.

It was the fastest-rising market among Australia's capitals in the past quarter.

Dr Nicola Powell, chief of research and economics for Domain, told 891 ABC Adelaide that the city was "bucking the national trend".

"We saw an acceleration in house price growth, with momentum strengthening both over the quarter and over the year, and that is not what we've seen in other capital cities," Dr Powell said.

Adelaide is now the fourth most expensive capital to buy a house, behind Sydney, Brisbane and Perth.

Adelaide supply lagging behind other capitals

Dr Powell said increased housing supply across Australia was driving fluctuations in price changes.

Year on year, supply has increased around 17 per cent across the nation's capital cities.

But Adelaide trails the nation for growing its local supply – only a six per cent increase in the past 12 months.

"Adelaide also still has one of the tightest rental markets in Australia, and that has flow-on effects also to pushing demand quicker into purchasing," Dr Powell said.

Despite the apparent demand for Adelaide housing shown by the latest report, real estate agents are starting to see changes on the ground.

John McRostie, principal of Belle Property Real Estate, saw no interested buyers at one inner city terrace on Thursday morning.

He told the ABC that local buyer confidence was lacking and turnout at open inspections and auctions across the city was low, particularly among investors. It may mean sellers are forced to reconsider how they price properties.

"The numbers are less, so now, you've got some nice properties, you've got to price them properly, you've got to be prepared to adjust them, and you've got to work hard with the buyer," Mr McRostie said.

There was little difference at another open inspection in Parkside on Thursday morning, where the only person in attendance was local John Albanese.

"I live in the area, I saw this open, and thought I would pop in and have a look," Mr Albanese said. "I thought there would be more than just myself."

High price a credit to lifestyle, but not sustainable

Mr McRostie said Adelaide's lifestyle and livability was a major appeal for buyers.

Along with Melbourne and Sydney, the city was recently named in the top 10 of the world's most liveable cities in the Economist Intelligence Unit's annual ranking.

"It's great to see the average price in South Australia to be quite buoyant," Mr McRostie said.

"Adelaide is a great place to live. It's just a nice lifestyle; it's different from Melbourne and Sydney. Adelaide deserves it."

High median prices might be welcome for sellers, but for buyers struggling to find a home it may be a different story.

Greg Nield attended one open inspection in Adelaide's inner north on Thursday afternoon. Already a home owner, he wants a bigger house to meet the needs of his family as his school-age children grow older.

"It's a bit hard to find a property that ticks all the boxes we want and is still in the area that we need," said Mr Nield.

"The ones that are nice go very, very quickly. And often someone puts in an offer before it goes to auction.

"Then other houses, I think people put a higher price above, trying to get something within the market and capitalise on the interest, and those ones sometimes stay on the market for a bit longer."

Dr Powell described Adelaide as a long-term "quiet achiever" when it came to property prices, but it would likely see declines in future reports.

"What I'm expecting is that a 5 per cent increase each quarter is not sustainable and I think what we will see is higher borrowing costs will start to help to slow down the pace of price growth," she said.