Darwin recorded less than stellar performance in the July quarter, prompting many to ask the question: Is Darwin losing steam?
Those who have long predicted an end to Darwin's boom maybe feeling a bit vindicated after the latest data from Residex showed median house values increased by just 3.35% to $475,000. While this is still a good number, it fell well short from the growth recorded in Sydney and Melbourne. During the month of July, median house values actually fell by 0.41% while median unit value rose by 2.22%.
However, local agents are quick to dismiss suggestions that the boom in the Darwin market is finally coming to an end.
"We've experienced our best ever sales month in July to the tune comfortably a record -up 60% from our previous best. I think the reason the Residex data showed a slowing market is because June was terribly slow month. But July was flat out and August started out very well as well," explains Glenn Grantham, GM Raine & Horne Darwin.
"It's hard to work these trend, because we can get exceptional June or really bad June. It's could also be due to the end of financial year."
Grantham points out that Darwin was very strong even during the economic downturn.
"Darwin has its own micro economy that sustained itself and now that things are improving its starting to relieve it. I absolutely believe the boom continues," he says.
However, Darwin's success is a double-edge sword, says Terry Roth, state manager with Herron Todd White Property Valuers (NT). While it encourages more homebuyers to get into the market, it's keeping many investors at bay.
"Investors are still cautious with the big increases in capital growth which pushed yields lower," he says.
No worries about oversupply
One of the issues that continued to dog the Darwin market is the fear of oversupply situation. But Grantham says this is unlikely to occur.
"I don't think there's any looming oversupply situation. What' you're looking at here is an undersupply of property and a constantly growing population. The government is not releasing enough available land so where do you go? Of course you go up.
So there could be a risk in the higher density housing sector because that's where the concentration of the new supply is.
If the government is planning on releasing just 500 blocks of land not 5000, so what this means is that you're restricted to the existing property plus a few new ones every year. As a consequence as the population grows, they need to build new housing. To sustain this we need to go somewhere and only way to do that is to go high rise."
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