Adelaide's housing market remains affordable: BIS Oxford Economics

Adelaide’s estimated median house price of $510,000 at June 2018 represents a four per cent increase for 2017/18, according to a report released this week from BIS Oxford Economics.

“With relatively soft economic conditions, prices in the Adelaide market appear to be responding to low interest rates,” said Angie Zigomanis head of BIS Oxford Economics' residential research unit.

“Net interstate migration outflows have improved slightly, although remain high, while new dwelling completions remain elevated."

Mr Zigomanis forecasts that “economic conditions in South Australia are to remain subdued in the short term."

"The unemployment rate for the state is above the national level, and a lull is expected as the economy responds to the shutdown of automotive manufacturing ahead of other future employment drivers such as ship building ramping up."

Affordability in Adelaide does not appear to be a constraint on the market and this will support prices.

Growth in net overseas migration inflows into South Australia is unlikely, although net interstate migration outflows are expected to slowly improve as the employment outlook eventually improves, the economists suggested.

Modest growth averaging three per cent per annum is forecast for 2020/21, beginning to accelerate into the final year of this outlook as the economic environment steadily improves.

In contrast, there has been a decline in median unit prices in 2017/18 in response to high levels of unit supply and a further decline is forecast in this report for 2018/19 before unit prices stabilise and improve in subsequent years, although still only display modest growth.

For a look at our take on the BIS Oxford Economics report for the national market check out, "Melbourne house prices forecast to tread water through to 2020/21".