Challenges ahead, but buyers still on top
For all its negative press, the NT could be preparing to play a handful of winning cards – and might even have a few aces up its sleeve for buyers
At first glance, the Top End’s recent real estate performance doesn’t inspire much confidence. The mixed bag of results shows falls in values across the board in the year to February 2016, CoreLogic RP Data reports, with the exception of 30 suburbs reporting positive growth.
While that already seems like enough bad news, the capital city’s next hurdle is its high vacancy rate, prompted by an influx of new supply and a population exodus.
Although the vacancy rate has tightened by 0.2% in the year to February 2016, to 3.6%, SQM Research managing director Louis Christopher notes that “despite this, both Darwin
continue to record an alarming number of vacancies, particularly when you consider the number of vacancies recorded this time last year”.
By extension, it’s fair to say that it is investors who are feeling the pinch of the lowering rents and diminishing demand.
On the flip side, the first of Darwin’s aces is its rental yield, which is the highest in Australia at 5.2%, a CoreLogic RP Data report shows, and despite its economic difficulties it continues to have the lowest unemployment rate in the nation.
In addition, the April ANZ/Property Council Survey revealed that property confidence in the Northern Territory gained six points from the December quarter to March 2016, rising from 105 to 111.
When all factors are considered, including major government injections into infrastructure and construction projects, experts are seeing the upside of the falling prices.
The Property Council of Australia’s Ruth Palmer, director of the Northern Territory division, says that although the current weakened demand would cause some challenging times in the property sector over the short term, “the Top End’s long-term prospects across the entire property sector remain positive, so the real question is, how can investors take advantage of these weaker market conditions”.
“For investors who are willing to take a long-term approach, there will be a number of opportunities in the short to medium term,” she says.
The NT’s property market is certainly a buyer’s gold mine, as prices plummet and a high number of listings add to vendor motivation. CoreLogic RP Data confirms a 14.1% increase in properties on the market in the 12 months to February 2016.
SUBURB TO WATCH
Tiwi: Staff and student demand keeps yields firm
Partly built before Cyclone Tracy hit in 1974, Tiwi is one of Darwin’s tightly held northern suburbs.
Home to the Darwin Royal Hospital, Tiwi caters to year-round demand from hospital staff and is next door to the NT’s largest shopping centre, Casuarina Square, and its commercial precinct.
Beaches lie on its doorstep, Charles Darwin University is walking distance from south Tiwi, and Darwin CBD is a few minutes’ drive away.
Many dwellings in Tiwi – which include single-storey and larger homes on 800sqm blocks – were built post- Cyclone Tracy and meet cyclone regulations. Its older ex-housing commission properties are popular with investors and buyers entering the market, according to real estate agents. These properties are seeing excellent capital gain through renovation, which as a whole is driving gentrification in the suburb.
Tiwi has performed well to date, with high rental returns and a house median under half a million dollars. The slide in prices in 2015, paralleling the downturn of the Territory’s market, could present an opportunity for investors looking to nab a family-sized home on a large block for even less.
Can you afford to buy in this suburb? Find out how much you can borrow