Up, up and away
Just when you think prices in NT may have reached their peak, the property market delivers another growth spurt.
Somewhere between “a booming frontier town and an emerging provincial capital city”, Darwin and Palmerston property markets are benefiting from unprecedented growth and investment in resources industries, confirms Andrew Peterson from NextHotspot.com.au.
“The resources investment in the Northern Territory is something like 150 times the per capita spend that Victoria or New South Wales is getting,” he explains, adding that Darwin and Palmerston “each have unique investing dynamics”.
From a property investment point of view, this translates to opportunities aplenty to secure good-quality properties that attract high returns and strong capital growth – that is, provided you have deep enough pockets to invest in the NT in the first place.
As Real Estate Institute NT chief executive Quentin Kilian points out, it’s not the cost of borrowing money
that is an issue, it’s “the cost of purchasing the property”. Sourcing funds to cover a deposit, stamp duty and other buying costs for a $600,000 home easily chews through the better part of $100,000 – and how will mortgage holders cope, Kilian wonders, when interest rates eventually rise?
Yet buying activity continues unabated in the top end, as it seems investors are keen to secure a piece of the action.
“With around 3,000 construction workers for the Inpex gas project expected to start arriving this year, Palmerston seems the logical place for them to live,” Peterson says.
“It’s got very low unemployment, great lifestyle options and low rental vacancies. In broad terms, there’s a lot going on and I think it’s only going to get stronger.”
Council rates set to increase
While rents and capital growth rates in the top end are tracking upwards, so are council rates, with both Darwin and Palmerston expecting rates levies to increase by up to 10% this year.
In 2012/13, the minimum residential rate for Darwin was lifted by 4.5% over the previous year, increasing by $40 to $922.
This year, the Darwin Council predicts it will need to increase rates by around 9% from July 2013, in an effort to meet the city’s growing utilities expenses, which are expected to rise by about $2.5m in 2013/14.
Meanwhile, in Palmerston, Mayor Ian Abbott says power, water and sewage increases will cost Palmerston Council an extra $455,000 in the next financial year, and street-light maintenance an extra $340,000.
Abbott says that while the council has been able to keep rate increases to an average of 2% annually for the past three years, due to these increasing costs it is likely to be closer to 10% this year.
Bellamack is one of four new suburbs in Palmerston East – along with Johnston, Mitchell and Zuccoli – that will provide about 3,000 new residential lots to the community over the next few years. Development of these suburbs includes major infrastructure and services to meet Palmerston’s fast-growing population.
Just 4km from Palmerston’s CBD, Bellamack is a popular suburb with growing families, as over 20% of the master-planned community is dedicated to parks, walking tracks, bushland reserves and playgrounds.
“It’s a great neighbourhood as it’s a very family-friendly area, and it’s close to shops, schools, parks and
transport. You’re within minutes of the Palmerston CBD and Palmerston shopping facilities,” explains local
realtor John Mouzourakis from Ray White, Palmerston.
While RP Data’s official median price is currently around $230,000, this figure likely reflects a rash of land-only sales, as the suburb’s average price point sits somewhere above the half-million-dollar mark.
Weekly advertised rents are achieving a median of $750, according to RP Data, while returns of up to $850 and even $900 per week can be achieved on newer, bigger homes. As a result, when depreciation and low interest rates are factored in, Bellamack offers investors an opportunity to secure a positively geared investment with strong capital growth.
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