South Australia's property values continue to rise despite a national downturn.
In July, property prices nationwide fell 0.7%, according to Cotality. That's the largest single monthly decline since December 2022. Year-over-year, the research firm found that front-runner cities Sydney and Melbourne saw home values decline, down 2% and 2.8%, respectively. But not all capital city property values are created equally.
Among those still experiencing growth are South Australia, particularly in the Adelaide area. Home values grew 10.5% in the year leading up to July, year-over-year, according to Cotality.
Even regionally, South Australia is one of two states (alongside Western Australia) where property prices rose in recent months, up 2.1% in the most latest quarter.
"South Australia is as steady as she goes; it's a solid market," Belinda Sugars, franchise owner and mortgage broker at Mortgage Choice Parkside, a suburb of Adelaide, told Australian Broker. "And South Australia has been doing a little bit of a catch-up in the last couple of years, matching what other states have done [in prices]. So we've had quite a bit of room to move."
A robust jobs market, increased migration to the area and a national housing shortage are all driving upward momentum. At the same time, South Australia offers programs unavailable elsewhere in the country that make it easier for people to enter the market. That can bring more buyers into an already tight market, putting further pressure on prices.
Joey Delis, a Loan Market broker in Adelaide, said: "It's purely a supply issue in South Australia that's keeping the price demand high. We just don't have enough land or enough infrastructure in certain areas, like the north and the south, to be able to create more allotments of land fast enough for people to buy them."
Affordability is adding pressure. South Australia remains relatively cheaper than many of its Eastern State capital city counterparts, attracting more potential buyers to the market. But with demand rising and housing supply falling short, that affordability advantage is creating another source of tension.
"We're no longer as affordable as we used to be. But when you compare South Australia to the eastern cities, like Sydney and Brisbane, it's definitely more affordable," said Bryan Ong, founder, director and Broker at Rise High Investor and Financial Solutions in Adelaide. "You need significantly more borrowing capacity and serviceability to purchase property in the Eastern States. You can still get $600,000, $650,000, $700,000 properties in South Australia. And they're investment grade. Or you can find properties in really good locations."
The broker added that the state's defense infrastructure is creating jobs, while local government organizations are making it easier for would-be homeowners to jump on the property ladder.
"Supply is always an issue. But I do think South Australia's state government is doing quite a fair bit to assist first-time homebuyers," Ong said.
One example is HomeStart, a South Australian government-owned home-finance organisation designed to help people buy a home when other lenders' deposit or borrowing rules make it difficult. HomeStart offers loans with lower deposits and more flexible features, such as a 2% deposit, versus the national 5% deposit scheme, aka the Home Guarantee Scheme. The catch is that aspiring homeowners need to take up residence in South Australia.
But plenty of people are willing to make the move. In fact, Blake Buchanan, general manager at Specialist Finance Group (SFG), said South Australia is an increasingly important region for the firm. The mortgage aggregator recently added HomeStart to its lending panel, giving SFG brokers access to HomeStart's products.
"South Australia has been a fantastic growth story for SFG and is now one of the fastest-growing regions within our network," Buchanan said.
Beyond the economic fundamentals, Buchanan said other factors are supporting property prices, setting the state apart from other parts of the country.
"There's a lifestyle story there that is probably underrated," he explained. "Adelaide locals will tell you everything is 20 minutes away, whether that's Glenelg, the Adelaide Hills or heading towards Hahndorf and the strawberry farm. They might be slightly optimistic with the stopwatch. But compared with spending an hour in Sydney traffic, it makes a pretty compelling argument."
He added that demand is broadbased across borrower segments, creating opportunities for brokers and lenders looking to expand their revenue streams.
"Rather than relying on one particular type of buyer, you've got first-time homebuyers trying to enter, established South Australians moving through the market and investors competing for stock. When you combine that breadth of demand with constrained supply — and a city where apparently nothing is ever more than 20 minutes away — you start to understand why South Australia has been such a resilient market."
Meanwhile, with interest rates still high — and likely to stay higher for longer — brokers on the ground don't anticipate a major surge in South Australia's property prices anytime soon. But they don't see the market reversing course either.
"I think we'll still see a little bit of growth, but it's definitely going to ease off and go back to sleep for a little while," said Scott Bament, franchise owner and broker at Mortgage Choice Morphett Vale in South Australia.
Ong added: "I think South Australia's market will always keep growing, just a bit more slowly. Basically, we're not going to see the growth that we've seen over the past five years. But I don't ever really think that our property market will substantially go backwards. I'm still pretty optimistic."
