, star performer for a number of years, has shown that it is ultimately at the mercy of resource town boom-and-bust economics.
Anaemic house price growth, despite lingering undersupply, and the worst-performing unit market in Australia for the three months ending 31 May are the results of a resources hiatus in the Top End.
“The prospects of employment growth in the short term aren’t as strong,” says Terry Roth, director of independent property advisor Herron Todd White in Darwin. “And without employment growth up here, we just don’t get demand for housing.”
Roth is referring to the recent announcement by multinational resources giant Inpex that it would defer a decision on its $12bn natural gas project in Darwin Harbour. The head of Inpex’s Northern Territory operations says the company is still committed to Darwin, but any investment will now be delayed until 2012. “We’re in between projects at this stage,” says Roth. “We’ve had… Conoco Phillip
s and their LNG plant. It’s those big infrastructure projects that create employment growth up here. When those projects finish, a lot of people tend to move down south. So until we get a big project happening again, we’re in a bit of a lull. There’s plenty planned for the future, but at the moment we’re in limbo.”
For investors, now may be a good time to take advantage of softer prices, but only if it is to hold the property for the medium to long term. “Anything close to Darwin CBD – and there’s only a couple of suburbs here – is always going to hold its value well,” says Roth. Beware, however, the upper-end units ($1m plus) in the city, as there is still a marked oversupply in this market.
Better opportunities exist in medium-density housing 20 minutes north of downtown Darwin. With proximity to Royal Darwin Hospital, the university and the Casuarina Town Centre, they are highly prized by renters. Roth points out that Brinkin, in particular, has the best of all worlds – waterfront living with access to amenities at an affordable price.
“The future for Darwin is still very bright,” he says. Investors must ride out the quiet periods, however, to reap the long-term rewards.
The NT government is planning for another population explosion in the next five years and, as a result, is forging ahead with massive land release programs. “They got caught short, Roth says. “They’re now frantically getting land developed or leasing land, but it’s an extremely volatile political issue up here at the moment, so they’ve released their five-year plan.”
The most ambitious part of the plan is the creation of a new satellite city slated around 2015. When Palmerston is at capacity, the NT government will start to release land at Weddell, which is just under an hour out of Darwin. This will be another exciting opportunity for investors, but it’s still a long way off.
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