The Northern Territory has been an investment powerhouse for so long it’s almost surprising to see it falter. But falter it has.
Houses and units in Darwin are seeing negative growth of -2.21% and -3.64% respectively in the quarter ending April 2011, according to Residex.
The president of the REINT, the NT’s real estate institute, agrees with Residex’s figures.
“Our figures show that houses dropped 1.7% to a median of $550,000 in the March quarter, and that units were down 0.7% to a median of $435,000,” says Quentin Kilian.
It’s not all bad news for investors, though. “Yields still remain robust,” says Kilian. “Our figures still show a 5% yield on houses and a 4.8% yield for units. If you look elsewhere in the Territory, yields are even higher – average yields in Alice Springs are 6.1% and in Katherine it’s 6%.”
The NT Government has introduced a $10,000 incentive in its budget for 2010–11 to spur buying for new properties. The Build Bonus grant is available for anyone who builds or purchases a new home up to the value of $530,000 for new home contracts signed between 3 May and 31 December 2011, with construction commencing from 3 May 2011.
However, the Territory’s ongoing problem of supply still remains unaddressed by the government. The next major land sale in the Darwin region is set to occur towards the end of 2011, in the new Palmerston suburbs. The NT Government has also commenced planning for a series of villages in Litchfield, where over 7,800 homes could be built.
Kilian maintains it’s not enough.
“The government is far too slow with land release,” he says. “Things will heat up again if they’re not ahead of the game, especially with Inpex and other offshore gas projects coming soon.”
The giant Inpex project promises to be a major driver of the NT economy, and is likely to bring millions of dollars of investment, supporting industry, jobs and people to Darwin.
Other offshore projects are also getting the green light, just adding to the momentum of a potential resources boom for the Top End. However, the deal for Inpex still hasn’t been inked – and Kilian highlights that it’s very much a ‘wait and see’ mode until it is.
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