I live in Adelaide. I remember as a teenager seeing real estate ads for 4 bedroom homes close to the CBD for $80,000 or house and land packages with new home from $69,900 in the Northern Suburbs. I remember some of those large, nice new homes in the late 1990s and early 2000s on quarter acre blocks with plenty of room. Now, you are lucky to have a 6 or even 9m wide block to build on. And buying a house for under half a million dollars? Forget it. Adelaide, once celebrated as one of Australia’s most affordable cities, has seen a dramatic shift in its property market. In recent years, the City of Churches has transformed into one of the least affordable housing markets in the English-speaking world. This stark change has caught the attention of both potential homeowners and property investors.
Even from 2015-2020 buying a house was relatively easy in Adelaide. Now I wonder, will we just have a generation of renters and landlords?
Remember this from the 1990s?
A Shocking Report on Housing Affordability
The annual Demographia International Housing Affordability report has cast a harsh light on Adelaide’s property market. The report ranks global cities based on the ratio of property prices to household incomes. According to the latest data, Adelaide is now the ninth least affordable city in the world. This is a significant leap, highlighting the rapid escalation in housing costs relative to incomes.
In this report, Sydney took the second spot, making it the most unaffordable city in Australia, with property prices 13.8 times the average income. Adelaide, not far behind, has a ratio of 9.7, making it almost as challenging for residents to purchase a home. This places Adelaide in the company of other high-cost cities like Melbourne, Brisbane, and even Greater London.
Ah, the memories of cheap and affordable housing in Australia
The Surge in Property Prices
Market data reveals that the average house price in greater Adelaide has soared to $742,000, marking a 12.4% increase from last year and a staggering 57.5% rise since pre-COVID times. Unit prices have followed a similar trend, increasing by 13.8% over the past year and 41.4% over the past five years, reaching an average of $495,000.
The Impact on Renters
This surge in property prices has also significantly impacted the rental market. The average weekly rent for a house in Adelaide now stands at $575, while units rent for an average of $480 per week. For many residents, this means that more than half of their income is consumed by housing costs, whether through rent or mortgage repayments.
A Crisis of Affordability
The situation has been described as the worst it has ever been by Anglicare Australia’s executive director, Kasy Chambers. He emphasizes that this is not an exaggeration but the new reality for many Australians. Housing affordability has halved for those on minimum wage over the past year, underscoring the severity of the crisis.
A Broader National Issue
Adelaide’s housing market woes are a microcosm of a broader national trend. Across Australia, property prices are, on average, 9.7 times typical incomes. This is higher than in other English-speaking countries like the US, UK, Canada, Ireland, and New Zealand. Australian housing affordability has deteriorated significantly, with the price-to-income ratio rising from 6.9 in 2019 to the current figures.
Rising Inequality and the Erosion of the Middle Class
The report highlights a growing disparity between the most and least affordable markets in Australia, indicating a rise in income inequality. Historically, owning a home was a hallmark of middle-class stability, with house prices generally rising in line with household incomes. However, this balance has been disrupted. Now, land prices have soared, and house prices have tripled relative to household incomes in many markets, including Adelaide.
My Perspective on Adelaide Property Prices
As someone who has closely observed Adelaide’s property market over the years, I find this shift both alarming and disheartening. Adelaide was once a beacon of affordability, offering a quality lifestyle without the exorbitant costs seen in other major cities. This drastic change not only affects potential homeowners but also reshapes the socio-economic landscape of our city.
The skyrocketing property prices mean that young families and first-time buyers are being priced out of the market. This trend could lead to long-term consequences for the city’s demographics and economic diversity. Furthermore, the rental market’s strain adds another layer of difficulty for those who cannot afford to buy but also struggle to pay ever-increasing rents.
Adelaide’s property market has undergone a dramatic transformation from affordability to severe unaffordability. This shift has significant implications for the city’s residents and its future. As we navigate this new landscape, it is crucial for policymakers and stakeholders to address these challenges and strive for solutions that restore some measure of affordability and equity in Adelaide’s housing market.
