An interest rate cut next year would see Adelaide home values increase by up to 14 per cent, a new forecast has revealed, with SA homeowners standing to make up to 8 per cent even if rates hold.

According to SQM Research’s Christopher’s Housing Boom and Bust Report 2025, in the most likely event – a 25 to 50 basis rate cut in mid-2025, population growth continues at 500,000-plus and no new inflationary outbreak, Adelaide’s median house price is tipped to rise by between 8 and 13 per cent next year.

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This is up significantly on the average 1 to 4 per cent increase tipped across Australia’s combined capitals.

Assuming a rate cut in the March quarter and the same rate of population growth, home values could grow by 10 to 14 per cent – up on the 6 to 10 per cent national capital city average forecast under the same conditions.

Report author Louis Christopher said Adelaide was tipped for another solid year.

“Despite the strong rises since 2021, Adelaide housing prices are still widely regarded as being affordable,” he said.

“This leads me to conclude Adelaide will have another strong year, driven by first homebuyer activity, a tight rental market and somewhat offset by an economy that will likely underperform.

“But I am assuming Adelaide’s population will grow stronger than expected.

House prices are tipped for solid value growth in 2025. Picture: Stephen Brookes

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“The key risks are that population is weaker and another surprise rate rise would stop the market in its tracks.

But it’s still good news for homeowners even if a rate cut does not eventuate.

Under modelling for a scenario that includes no rate cut in 2025, continued population growth and no new inflationary outbreak, Adelaide homes stand to increase by 4 per cent to 8 per cent during 2025.

This is streets ahead of the national forecast, which predicts a value change anywhere from a 3 per cent drop to a 1 per cent increase.

Homeowners would still win under a scenario in which population growth fell to less than 400,000 people, no rate cut and commodity prices remaining stable.

Under this modelling, Adelaide homes would still grow by between 4 per cent and 8 per cent – up on the forecast drop of between 0 per cent and -4 per cent forecast for Australia’s capital cities.

SQM Research director Louis Christopher

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Mr Christopher said Adelaide’s market favoured sellers.

“Looking at the leading indicators of stock on market and auction clearance rates – Adelaide does have a strong auction presence – suggests the market remains very much a seller’s market as we completed 2024,” he said.

A recent YouGov study of 1500 Australians commissioned by the Property Council revealed eight in 10 residents felt there was a lack of affordable housing in their area, while the high cost of housing was the second most important issue to respondents, after cost-of-living pressures.