Adelaide property market set for significant growth amid tight supply

Announcement posted by Performance Property 21 Jan 2025

21 January 2025: Adelaide's property market is projected for significant growth as supply and demand pressures intensify. With a current vacancy rate of just 0.8%, well below the balanced market range of 2-3%, both rental and property prices are expected to rise sharply over the coming year.

Sources:

SQM Research (2025) Weekly rents - Adelaide, SA. Retrieved January 15, 2025, from https://sqmresearch.com.au/weekly-rents.php?region=sa-Adelaide&type=c&t=1
SQM Research (2025) Vacancy rate graph - Adelaide, SA. Retrieved January 15, 2025, from https://sqmresearch.com.au/graph_vacancy.php?region=sa-Adelaide&type=c&t=1

Recent data highlights the growing demand, with Adelaide expected to welcome 22,000 new residents in 2025, equating to approximately 9,000 new households. However, forecasts indicate that only 9,700 new dwellings commenced in 2024, which will be insufficient to ease the escalating supply and demand issues. If these projections hold, the vacancy rate is expected to remain below 1%, sustaining high rental prices and further driving up house prices.

Sources:

Australian Bureau of Statistics. (2024). Building approvals, Australia: November 2024, Table 10. Retrieved January 15, 2025, from https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/nov-2024#data-downloads
Australian Bureau of Statistics. (2023). Population estimates by LGA, Significant Urban Area, Remoteness Area and electoral division, 2001 to 2023. In Regional population, 2022-23. Retrieved January 15, 2025, from https://www.abs.gov.au/statistics/people/population/regional-population/2022-23#data-downloads

David McMillan, Director at Performance Property, cautioned, "With such a low vacancy rate and ongoing population growth, Adelaide is experiencing significant supply constraints. If current building activity remains at these levels, rental prices are likely to stay elevated, which in turn, keep property prices high."

"Without intervention or policy changes to encourage new housing development, we expect these tight market conditions to persist until at least 2026, potentially driving Adelaide's median house price past $900,000 as cash rates fall."

With rental yields remaining attractive due to continued low vacancy rates, investors are likely to face increased competition for properties, pushing demand even higher. Additionally, affordability pressures in other major cities may drive an influx of interstate buyers seeking better value, further fuelling Adelaide's demand.

"Our extended forecasts suggest that unless significant changes occur, Adelaide's vacancy rate will struggle to exceed 1.25% by 2026, prolonging these market conditions," said David McMillan.

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About Performance Property

Performance Property is a leading property advisory firm specialising in data-driven research, analysis, acquisition, sales, and management of residential and commercial properties across Australia. Our team empowers clients with strategic market insights and offers tailored solutions to enhance property investments. We also provide expert property management services to ensure the ongoing success and value of clients' assets. By combining in-depth market knowledge with a comprehensive suite of services, Performance Property helps investors and property owners navigate the complexities of the market to maximise returns, manage risks, and achieve long-term success.