NT Excerpt from the 2014 April Market report

01 Apr 2014
Living next door to Alice

As buyer attention stays firmly glued on Darwin, investors could be missing great opportunities in alternative Northern Territory spots such as Alice Springs

It takes a certain amount of endurance to drive from Darwin to Alice Springs. The route cuts through hellishly hot desert on 1,500km of unbending roads colloquially known as “The Track” which, until 2007, had no speed limit. To this day, sections of the highway are more than 200km from a petrol station.

It is no surprise then that Alice Springs has not always followed the growth patterns of its northern state capital. 

The ebbs and flows of Darwin economic growth have filtered into Alice to some degree, but the city’s isolation has traditionally guaranteed that such affects have influenced growth rather than dictated it. This partly explains how the city’s property market has been subdued over the last three years while rapid growth has persisted in Darwin and much of the North Territory.

Hotspotting director Terry Ryder says that property in Alice Springs has a history of growth quite apart from that of Darwin and one that has been impacted by Federal government policies. 

Spurred by the after effects of a government initiative, the city recorded nation-leading growth in 2010 when its median house price grew by more than 20%, but since then prices have fallen.

“Price rises for houses and apartments [in 2010] were generated largely by an influx of people working on government programs aimed at resolving local issues relating to camps and high crime levels,” Ryder says.

“Before John Howard lost government in 2007, a Federal Government policy of ‘intervention’ began. It brought new government programs into Alice Springs, adding to housing demand in a town where land supply is constrained by cattle stations, crown land and aboriginal land.”

Now that the market has corrected itself from its earlier rapid growth period, Ryder believes Alice Springs real estate could be poised for a comeback.

The major sources of work that draw people to the town are cattle stations, mining operations, tourism and government administration and Ryder says that this diversity should drive consistent growth in rents and property values.

“The region includes a number of mining and pastoral communities, the Joint Defence Space Research Facility at Pine Gap and tourist attractions at Uluru-Kata Tjuta National Park, Watarrka National Park and the MacDonnell Ranges. Transport is another major industry and employment overall is strong… Alice Springs has a strong future with definite signs of growth,” Ryder says.

Recent activity

Evidence of the city’s emerging return to form – albeit at a slow pace – was an increase in sales activity over 2013. This saw 16% more sales in the 12 months to January 2014 compared with the 12 months to January 2013, according to RP Data. Despite the increase, transaction levels are still historically low, indicating buyers can be a lot more discerning in what they choose to purchase.

Rental yields across much of the city have been improving. Rents in suburbs such as Desert Springs and Araluen have grown by a respective 6.5% and 5.5%, pushing their median rental yield figures to over 7%. 

RP Data’s January figures also indicate most Alice Springs suburbs average around the mark of 6%-7% rental yield, making the city one of Australia’s most cash flow positive investment markets.

Suburb to watch: Karama

For a suburb that sits on the edge of Darwin proper, Karama has a surprisingly diverse range of amenities. A number of primary schools dot the suburb and a shopping plaza hosts a public library and retail outlets that include a Coles, post office, pharmacy and other shops.

Of course, the true appeal of the area is that it sits at the doorstep of the Holmes Jungle Nature Park, a protected area of monsoon forest. This gives the area a secluded feel, when in reality it is 10km north-west of the CBD and easily accessible from the rest of the city through McMillans Road or the Stuart Highway.

Like much of the rest of the city, property prices have been growing healthily in Karama (8% growth in the 12 months to January 2014), but there remain a sizeable portion of for sale properties that come onto the market for less than $500,000. The suburb’s small selection of units also offers affordable prices: the median unit price is $373,500.

The suburb appeals mostly to families with children, largely owing to this combination of seclusion and affordable prices, but larger block sizes remain an attraction too. Properties to the south and east of the suburb – closer to the Jungle Park – tend to attract a premium.

Top Suburbs : rooty hill , willoughby east , the basin , eagle vale , newcastle


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