A rise in interest rates is unlikely to slow Adelaide’s property market – realestate.com.au

Adelaide’s property market is so hot that not even a rate hike can slow it down, says a local buyer’s agent.

Cory Harding, founder of the Propsavvy buyers agency, said the shortage of available properties in the city, combined with strong demand, particularly for affordable housing and buildable land, would see some parts of the market remain “hot” after a surge.

In fact, he said an increase could fuel this even further.

Many buyers would turn to more affordable options as borrowing capacity was reduced, Mr Harding said, while developers would find it harder to build more homes as their holding costs would rise.

MORE: Rate Hike Adds Hundreds to Refunds

His comments come as the Reserve Bank hiked the cash rate by 25 basis points to 3.85 percent for the first time in two years, after inflation rose 3.8 percent over the year to December.

The RBA’s inflation target is 2 to 3 percent.

“Do I think this will slow down the market? I don’t see that happening,” Mr Harding said in a social media post.

“I still see a lot of people trying to enter the market.

“The affordability issue, not only for investments, but also for home owners, is still ridiculously topical.

“For example, lately I’ve seen properties on the market that have 30 offers on them and are all in the mid to high price range of $700,000, yet they are still selling $50,000 to $80,000 higher than the advertised price.

“It’s also why we’re seeing the number of homes in premium locations grow dramatically, because that type of market prefers to downgrade housing type rather than location.”

Mr Harding said demand for buildable land, affordable housing attractive to first home buyers and properties in premium areas would continue to drive growth despite a rise in interest rates.

“It’s the three markets that are doing very, very well,” he said.

MORE: Nearly $120,000 increase in a year – Adelaide’s home value growth revealed

The increase is not expected to have too much of an impact on the Adelaide market, a buyer’s agent says.

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“I still see a lot of people during the opening.”

Properties under $850,000, or $900,000 in some areas, were considered affordable, Mr. Harding said, while properties between $1.2 million and $2 million were “no man’s land.”

Meanwhile, executive managing director of global data, analytics and technology company Equifax Moses Samaha said a rate hike could also push many people to refinance.

“In 2022, the response to the first rate hike was immediate,” he said.

“Once interest rates rose in May 2022, refinancing volumes increased by 25 percent compared to the previous month.

“Mortgage holders quickly moved to safe interest rates before further increases occurred, and that activity remained about 15 percent above the April 2022 base level for the next six months.”