The Top End shows growing confidence and resource investment, but housing may take a bit longer to shine
Darwin has good reason to exude a bit of confidence amid the booming pace of resource growth happening in the Top End, but it is going to take a little more than that to help shake off the 5% shedding in prices homeowners experienced in the 12 months to February 2012.
But REINT CEO Quentin Kilian says he’s already seeing signs that a turnaround has begun, with data showing a 22% growth in sales activity in the December quarter last year, even before news broke that the massive $30bn Inpex LNG gas project was getting the go-ahead.
“So the activity is actually happening up here in a huge way,” he says. “Quite frankly, if investors sit around [doing nothing] waiting for a big signal, the signal has come and gone.
“The amount of open houses that are literally packed is astronomical. In September, you literally couldn’t attract someone to an open house.”
Louis Christopher of SQM Research has a slightly different reading of what that signal means for the market’s immediate prospects.
“The thing is a lot of the investment up there has already been taken into account into the price,” he says.
“So you see house price movements run up in anticipation of a certain project being completed. That’s not to say that the promise of future projects and outright prosperity for the city is not going to grow and grow, but house prices themselves can be overheated relative to the potential of that city.”
While Christopher expects to see growth in the long-term, he says Darwin is still facing a glut of new apartment dwellings that broke ground during the last run-up in prices that ended last year.
Angie Zigomanis of forecasting firm BIS Shrapnel sounds slightly more optimistic in his assessment of Darwin’s immediate prospects. But affordability, he says, is still a big issue following the Top End’s boom on the tails of the GFC.
“Darwin enjoyed a period of price rises through the GFC, so through an affordability perspective, I don’t think you can expect to see big double-digit rises,” he says.
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