Long-term buyers leveraging current market conditions in Adelaide

BuyersBuyers

Buyers taking long-term view

With an average holding period of over a decade for house buyers these days, long-term investors are leveraging on the current market conditions, according to Pete Wargent, co-founder of Australia’s first national marketplace connecting property buyer’s to buyer’s agents, BuyersBuyers.

Mr Wargent said, “since September 2003, capital city detached house prices have delivered 5.8 per cent per annum compounding capital growth, based on a weighted average measurement across Australia’s eight capital cities. Over the same period, attached dwelling prices have delivered capital growth of 4.2 per cent per annum.”

Figure 1 – Capital city residential property price indexes

“In early 2022, more listings have come on to the market, and overall the market has cooled as buyers are wary about the prospect of rising mortgage rates”.

“History shows that while the capital city markets move in cycles, over time, they have delivered solid price appreciation on top of the annual rental income” Mr Wargent said.

“Buyers taking a long-term perspective have an opportunity in the current market conditions to negotiate a good deal, with less competition from other buyers compared to what we experienced in 2021.”

Temporary housing market slowdown

Doron Peleg, CEO of BuyersBuyers, said that the outlook for the Australian economy is strong, with the unemployment rate expected to drop to half-century lows of below 4 per cent.

Mr Peleg said, “as we previously anticipated the unemployment rate is already down to just 4 per cent, which is as low as we have seen since the 1970s”.

Figure 2 – Australian unemployment rate

“Furthermore, based on historical trends, it’s entirely possible that the unemployment rate could yet fall to 3 per cent or even lower, ultimately resulting in rising household incomes”.

Figure 3 – Job vacancies versus unemployment rate

“While there is currently a slowdown in property market conditions, this is likely to only be a temporary situation. Previous cycles have shown that those who buy well are delivered excellent results” Mr Peleg said.

Quality is key

Pete Wargent of BuyersBuyers said that a shortage of rental properties is likely to characterise the property market over the years ahead, but buyers would need to focus on quality stock and negotiate well to get the best results.

Mr Wargent said, “the easy gains for this cycle have passed. Buyers need to focus on quality stock to mitigate risk. An A-grade house on a good, family-friendly street with little noise disturbance is the ideal asset. But unless you have a strong budget then you may well be looking away from Sydney, Melbourne, and Brisbane.”

“We recommend investors take a look at the market in Adelaide. The economy has been sluggish in Adelaide over the past dozen years, and the housing market returns have been steady rather than spectacular. But it’s hard to ignore the value proposition now that rental vacancy rates are tightening so dramatically. The timing for Adelaide looks good” Mr Wargent said.

Figure 4 – Top 10 suburbs for Adelaide investors

“If you want to look at other areas or budget price ranges,

/Public Release.