Lots of negatives and a bit of positives
Just like Perth, Darwin prices declined further as it deals with falling demand and oversupply
Investors who are looking for a bit of good news about the Darwin market aren’t unlikely to find it anytime soon.
The latest set of numbers from CoreLogic RP Data suggests that Darwin home values slipped -0.1% in January 2016, bringing home values down -1.4% over the past three months. During the year, values dropped by 2.5%. Along with Perth, Darwin is one of the only two capital city markets to see dwelling values fall.
Darwin investors also have to deal with a weaker rental market after rental rates dropped significantly over the past 12 months. House rents are now 13.7% lower, while unit rental rates have fallen by 12.1%.
“Given the decline across Darwin’s rental market, yields are currently lower than they were one year ago, however despite this, Darwin houses continue to record the strongest gross rental yield of any capital city at 5.3%, and unit yields are currently recorded at 5.1%,” says Tim Lawless, head of research, CoreLogic RP Data.
Deloitte Access Economics points out that, outside of the construction sector, most other economic indicators in the Territory are already showing clear signs of deterioration. These include:
- Population growth slowing from a peak of about 3.0% in early 2013. Current population growth is now only barely positive
- Retail turnover growth being below the national average for the past 12 months
- Car sales dropping away in recent months
- Housing finance deteriorating
- House prices dropping
- Rental vacancy rising.
Even more worrying than the indicators above is the downturn in business investment, according to Deloitte Access Economics.
“The latest official statistics do indeed suggest that business investment as a share of the Territory’s economy may have already peaked and is now starting the process of coming back down to Earth. The downside is that with business investment still accounting for around half of the Territory’s economy, the expected slide in business investment still has far further to fall. That will continue to weigh on economic growth as the Territory undergoes a challenging period of transitioning to new sources of growth,” it says.
On the upside, Deloitte Access Economics says the lower $A should provide a longer-term positive for the Top End. While job growth eased, Darwin’s job market remains in reasonable shape.
SUBURB TO WATCH
Stuart Park: Desirable suburb offers buying opportunity
Stuart Park is an inner city Darwin suburb bounded by Bayview, Woolner, Larrakeyah
and Darwin city itself.
It’s a highly popular suburb for renters that make up more than half (54%) of the residents. It’s just a short walk to the CBD and attracts a range of demographics from young residents to retirees.
The suburb boasts a good mix of housing, from imposing, large family homes to modern apartment blocks. Stuart Park is considered one of safest suburbs in Darwin by locals.
However, just like the broader Darwin market, house and unit prices dropped significantly during the past 12 months. Median house values fell by 9.2%, while units dropped by 3.4%.
Despite the recent drop in values for both houses and units, the suburb continues to be desirable to renters. Rental yield for houses is a solid 5%, while units are currently fetching 5.7% gross rental yield.
Over the next eight years, Onthehouse.com.au is predicting a 3% growth annually for houses and 1% per annum for units.
If you’re thinking of buying in Stuart Park, the best streets are Duke Street and Coronation Drive.
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