The Northern Territory’s property market has been riding a rough track for several months now.
The combination of a number of factors – nationally flat market conditions, a restrictive interest rate environment combined with stretched affordability and a dearth of infrastructure projects driving employment and population growth – has seen the Darwin market in particular gently sliding for several months now.
The net result of this is that, according to Residex, the median house price in Darwin fell below $500,000 in July – the first time it’s been below this mark since November 2009. Unit prices are also on a downward curve, falling to $391,000 in July from $397,000 the previous month.
Valuers Herron Todd White think that the unit value slides are due to an oversupply of prestige units.
“The oversupply of prestige units has resulted in discounting, with many vendors losing money on resales, and owners negotiating lower rents. This has had a flow-on effect to the lower quality units,” says the company’s latest Month in Review report.
So, is the Top End a no-go zone for investors? Perhaps in the short term – but the prospects are looking better in the medium to long term.
“The NT has enormous resource riches but currently little project spending,” says Deloitte Access Economics. That mismatch between potential and actual means moderate growth for now, though the Territory can expect to benefit from this great global cycle in resources in the next few years.”
Indeed, even one major project could be “bigger than Christmas”, according to Access Economics. The long-mooted Inpex LNG plant, approval for which is expected in November, could well be that boost.
However, other projects are also ramping up, which should also help fuel economic recovery. Projects currently under construction include the $1.4bn Montara oil field development in the Timor Sea, which is set to be completed shortly, along with a number of road upgrades and the ongoing $900m Darwin City Waterfront project. Other work in planning includes a $35m upgrade to Darwin’s International Airport, a $387m correctional facility, a $53m upgrade to Darwin Hospital and an $840m second stage of the Tassie shoal methanol project in the Timor Sea.
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