The NT unit market’s impressive performance over the past 12 months has continued to put smiles on investors’ faces, with capital growth reaching 20%
The unit market in Darwin has surged ahead in the past 12 months, with Residex recording a massive 17.02% capital gain in the year to February 2010.
The sector didn’t do badly in the quarter either, with a promising 6.72% increase to February, taking the median unit value up to $410,500.
Country Northern Territory was even more impressive, notching up 20.28% growth over the year and 7.64% over the quarter.
Propell National Valuers says this impressive growth in the unit market is not unexpected: “Demand appears to be for units as opposed to houses, which isn’t surprising given the high rental rate being asked on detached dwellings.”
Houses in Darwin also showed positive growth over the past 12 months, with a gain of 11.2%, yet suffered slightly in the month of February, recording a small drop of 0.83%.
The population has continued to rise in the city, putting further pressure on an already tight housing market. A spokesperson from Professionals Darwin notes that real estate agents are finding they have an abundance of prospective buyers for every property listed.
“The continuing nature of this demand has raised many industry calls for more land to be released by government, the major land owner in the Top End. Dribs and drabs and part suburbs have been released, but the market still cries out for much more,” the spokesperson explains.
“Property Council members recently called for some 22,000 houses to be built over the next 10 years to address demands.”
Propell National Valuers says a number of new land releases are currently in the planning stages, which should help the land shortage problem once completed.
“Any new releases are quickly taken up and prices are thus driven higher despite – or maybe even because of – government incentives.”
Defence Housing Australia (DHA) notes that Darwin is set to benefit from the Nation Building – Economic Stimulus Plan. The city’s strong defence presence and tight housing market are two driving factors behind the release of 185 defence houses in the city, according to DHA. Of all the major Australian cities gaining extra housing under the Plan, Darwin will receive the greatest number of dwellings.
Herron Todd White has identified a rental property shortage in the city, and a Professionals Darwin spokesperson has confirmed that supply is still well short of demand. The spokesperson adds that the strong price rises in 2009 resulted in a shift towards renting, rather than purchasing. “Rentals hit a wall at the turn of the year, yet quickly came back on stream from mid-February 2010 … Investors are still building and converting properties where they can find them on the market.”
Angie Zigomanis, senior analyst, residential property, BIS Shrapnel, believes that vacancy rates have eased slightly in the region: “But they’re probably closer to around the balanced market rate, rather than being in oversupply as yet.”
Professionals Darwin points to the suburbs of Leanyer, Nightcliff, Jingili, Brinkin and Stuart Park as having experienced exceptional capital growth in recent months.
Zigomanis explains that although prices shot up in Darwin recently, he expects price growth will slow from this point forward, while still remaining positive.
Projects propel the market
Professionals Darwin expects developments and resource projects to push further growth in the territory in the near future.
“Continuing growth will dominate our economy for the coming years with existing projects coming of age, new infrastructure coming on stream and natural progression of community infrastructure continuing on a predictable and modular growth pattern,” a spokesperson says.
Two major projects are expected to boost the NT economy in the near future, with the Blacktip Gas Project and Crocodile Gold Mining Operation set to add contract and full-time workers to the local workforce.
According to the Propell National Valuers’ Residential Overview report, there are a large number of projects in the pipeline for NT.
“A few delays in some large mining and exploration projects could have a diminishing effect on the market in coming quarters, however the vast number of smaller operations could probably help supplant the loss as the general economic situation improves in the region.”
Professionals Darwin predicts major improvements to housing infrastructure in bush communities, growth in defence housing with the completion of Lyons and creation of Muirhead, completion of infrastructure for four new suburbs in Palmerston City, the introduction of more affordable housing and further population growth throughout the territory.
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