South Australian real estate buyers have a short window to get into the market before interest rates start to fall again, according to Mr James Trimble, General Manager, Raine & Horne. 

 Last month, the Commonwealth Bank predicted that the RBA would cut the official cash rate by mid-2023[i].

 "Some of Australia's biggest banks are already tipping rate cuts next year to get inflation back towards the RBA's preferred 2-3% band," Mr Trimble said. 

 "Much of the inflationary pressures have been caused by massive supply chain issues leftover from COVID and exacerbated by the Russian invasion of Ukraine rather than consumer demand.

 “The fear is that cost of living pressures such as higher energy prices and mortgage repayments will send the economy into freefall. The RBA will want to avoid this at any cost, which puts 2023 rate cuts on the table.”

 Mr Trimble added, "While the Adelaide market continues to outperform other capital cities, my view is that if buyers think that we're in for a long-term real estate downturn, they must think again.

 "It’s fair to expect two more interest rate hikes in 2023, but as soon as the official cash rate starts to fall again, the South Australian market will click immediately into gear, and we'll return to 2021 levels of activity and growth in South Australia very quickly.

 "In Adelaide the market continues to tick along as genuine vendors continue to sell as genuine buyers compete for every property as mortgage interest rates are still relatively low.”

 In the south-eastern suburb of Blackwood in the foothills of Adelaide, for example, Mr Trimble reports that buyer enquiries are still running at 2021 levels.

 Traditional winter lull explains market stabilisation

 Mr Trimble maintains that winter is traditionally a slower period for real estate sales in South Australia due to the cold and rain, while parts of Adelaide have laboured through three elections in the last three months.

 “Many buyers and sellers often put their real estate plans on hold during election campaigns and we’ve had a State and Federal election, as well as the byelection for the state seat of Bragg in the city’s eastern suburbs.”

 Returning home and migration

 Mr Trimble is buoyed by more South Australians choosing to return to Adelaide for lifestyle reasons. 

 “While Adelaide real estate prices have finally started to catch up to Sydney and Melbourne, even our median house price is many hundreds of thousands of dollars cheaper than Sydney around and Melbourne,” Mr Trimble said. 

 The median house price in Adelaide is $700,000 compared to almost $1.4 million in Sydney and $1.0 million in Melbourne[ii]. 

 “However, people are returning to Adelaide or migrating here because our cost of living is cheaper than the major eastern state capitals. 

 “For example, private schools can be as much as 50% cheaper in Adelaide than Sydney, and more affordable education encourages more interstate buyers to consider this city.”

 Mr Trimble continues, “There’s no evidence that Adelaide real estate is heading into a price lull. With our more reasonable school fees, more affordable housing, and interest rate cuts now on the horizon, even with great growth, it's still a great time to get into the Adelaide market.”

[i] https://au.finance.yahoo.com/news/commonwealth-bank-predicts-when-the-rba-will-cut-rates-060319782.html

[ii] https://www.corelogic.com.au/__data/assets/pdf_file/0007/11500/CoreLogic-home-value-index-July-2022-FINAL.pdf