Changes ahead for Darwin market?
Darwin’s softer market is better for buyers, but it is hard to say how some changes to the market landscape might impact on the investor scene
Quieter times continue to dominate Darwin’s property market, yet it appears there may be some interesting changes afoot that could impact on the future property market.
The latest RP Data CoreLogic Home Value Index results show that Darwin’s dwelling values dropped by 1.0% over September and rose by just 1.4% over the quarter. The talk is that, after a strong couple of years, the market is currently correcting and thus levelling out.
Affordability concerns – due to some of the most expensive living and property costs in Australia – could also be playing a part in this softening of the market, according to the latest Herron Todd White report.
However, Peterson’s Property Search founder Tod Peterson believes the current market is beneficial for buyers. “They have more leverage and more negotiating power in this climate. As long as they are savvy, there are good opportunities for buyers to come into the market.”
It is worth noting that Darwin properties are also still pulling in the highest rents in the country, Peterson says. The latest RP Data figures show that this is indeed the case, with Darwin houses recording a yield of 5.9% and the city’s units posting a 6% yield.
“Accommodation is still tight up here. It can be a bit seasonal, and demand is always strongest during the dry season. But, overall, demand remains high … especially when you take shorter-term rentals into account.”
Despite the more subdued environment dominating the market, there have been some recent noteworthy developments. One such development is the Territory government’s drive to promote the top end’s resources to China. The goal is to attract big agricultural and infrastructure projects. A similar tactic was successfully used with Japan and resulted in the Impex project.
As a result of the government’s efforts to reach out to China, Peterson says he has been increasingly dealing with Chinese investors. While they have been interested in big blocks of land for food production and plantation purposes, this trend could impact on the NT market further down the track.
Another noteworthy development has been the state government’s efforts to deal with the aforementioned squeeze on accommodation. House and land packages have been released in northern Palmerston and the northern suburbs of Lyons and Muirhead.
Peterson says the state government is also interested in making use of infill land. “The release of this land is a cheaper way to deal with the accommodation problem, rather than setting up a whole new suburb and putting in headworks.”
The latest Herron Todd White report points out that, given stamp duty concessions for new builds only, there is likely to be a continued softening of old housing stock as new developments are completed. Land releases for further development may well contribute further to that situation.
SUBURB TO WATCH
Johnston: New suburb pulls in home buyers
It is affordability that is driving interest and growth in the newly constructed suburb of Johnston. Essentially, it offers families and first home buyers an opportunity to buy affordable house and land packages, says Brad Morgan from Ray White Darwin.
“The $26,000 first home buyer’s grant for new homes is a huge driver for this suburb. But it is worth pointing out that investors can get a brand-new house here for the same price they would pay for a 20- to 30-year-old in the northern suburbs.”
One of the satellite city of Palmerston’s upmarket suburbs, Johnston is growing fast. Properties are a mix of modern three- and four-bedroom houses on medium-sized blocks, modern units and duplexes – all new.
But Morgan says the best types of properties to buy are three- to four-bedroom house and land packages, with house and land packages in the sub-$600,000 sector of the market being most sought after.
A new suburb that caters to commuters, Johnston has a good public transport system, and as it is still growing there is ongoing development of amenities, parks and schools. That newness also means that, to date, no best and worst streets have been established.
“Further development around the suburb should boost prices and lead to further growth in values,” Morgan adds.
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