SA MARKET OVERVIEW
SOUTH AUSTRALIA
SA Market Overview with Harry Einarson
Reflecting on 2022, what were some of the prevailing trends that you noticed and how did they play out in the market? 2022 certainly was a challenging year for the property market locally but we did see why Adelaide was viewed so favourably by interstate investors post COVID lockdowns. Pricing largely held strong despite the rising cost of debt and high construction pricing which is a testament to the stable returns in the South Australian markets generally offered in comparison to some of the more boom and bust markets along the eastern seaboard. One clear trend which carried through to early 2023 is the demand from owner occupiers across all asset classes driving the market. Off the back of several years of strong trade we saw early in 2022 a large number of owner occupiers coming into the market looking to get out of the rental cycle. This push from owner occupiers pushed the investor and developer markets throughout campaigns and was a key reason as to why the market continued to see strong asset pricing. We now are starting to see the market revert back to fundamentals when considering the passive investment market. Early 2022 prior to the initial interest rate rises saw the investor market chasing long term cashflow regardless of asset class or location. From March onwards the investment market struggled to effectively price in the rising cost of debt which slowed the market for passive investment product. Heading in to 2023 we have started to see more activity in this sector of the market with the key takeaway being that the market will now price in underlying land values. Marketwise, what are you forecasting in 2023 and how will increased lending costs impact various markets? Our year started with limited stock on market as Vendor’s wanted to see at least a stabilisation from the RBA before making decisions. The market certainly started to pick up heading into April as it felt like we were getting to this point. With the recent rate rise that was designed to shock the market we have seen some of the growing confidence start to question whether or not to transact. This lack of certainty has
HARRY EINARSON Director CBRE Capital Markets Metropolitan Investments Adelaide
94 – May / June 2023
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