FIFO rules the market
While Darwin is no longer achieving the eye-popping growth it racked up in recent years, it’s by no means out of gas
Thanks to its strong economy, FIFO workers and an undersupply of property, the outlook for Darwin’s property market continues to be strong, despite its slower growth compared to Sydney, Melbourne and Perth
According to the March figures of the RP Data-Rismark Hedonic Home Value Index, Darwin’s dwelling values grew by a meagre 3.8% compared to Sydney’s 15.6% and Melbourne’s 11.6%. Compared to its peak, values have actually fallen by 5.1%.
However, this is no reason to panic, given the territory’s strong economic fundamentals. Darwin still has one of the country’s strongest economies and lowest unemployment rates.
Australian Property Monitors’ Andrew Wilson says the property market is currently driven by the FIFO workers who are now an integral part of the Territory’s growing mobile workforce. “They are driving the ongoing high demand for property – both to rent and for purchase,” he says.
Given Darwin’s chronic undersupply of property, which is a major structural issue for the market, this means the city now boasts some of the highest house prices in Australia. In fact, the RP Data-Rismark index results show that, with a median dwelling price of $547,000, Darwin is second only to Sydney.
This underlying dynamic also means the city has a strong rental market with a low vacancy rate. According to the RP Data-Rismark figures, Darwin houses (with yields of 5.9%) and units (with yields of 6.2%) offer the highest rental yields in the country.
While Darwin’s small market means it could be volatile and difficult to measure, Wilson says “the impact of the FIFO workers is quite extraordinary and it keeps that underlying demand for property ticking over”.
The medium- to long-term outlook for Darwin therefore remains positive, Wilson says. “It is a market on its own. But it is difficult to see how its prospects could fail to be good when the strength of the city’s economy, combined with the shortage of property, is taken into account.”
Meanwhile, the latest Herron Todd White report notes that the city is going through a residential housing construction boom. It says there are “cranes in the CBD, tradies as far as the eye can see, and heavy machinery creating new sub-divisions daily”.
This construction activity has been prompted not just by the undersupply of available property but also by the high median property prices that now characterise the market. The report says it is often far more cost-effective for market participants to look towards building a property.
Wilson says that, when there are high levels of construction activity in a market, there is always a risk that the market will move ahead of the underlying demand. However, he thinks the unique combination of factors currently at play in Darwin should prevent that from happening.
SUBURB TO WATCH
One of central Darwin’s newer suburbs, Woolner emanates an aura of quiet and respectable exclusivity. Yet it is just 3km from the CBD, close to some major arterial roads (which it is screened from) and on the edge of a light industrial area.
Gabriella Sawyer, from Real Estate Central Darwin, said part of Woolner’s uniqueness is that people don’t drive into it unless they live there or are visiting residents.
“Once you are in it, and see what a beautiful residential suburb it is, it’s hard to believe you are so close to the city,” she says.
Not only is it blessed with proximity to the CBD, but it is also close to the sought-after suburb of Parap
, as well as Darwin Harbour and a good range of schools, parks, shops, and entertainment options. It is also well served by a reliable bus service.
Sawyer says Woolner has many sleek townhouses and unit complexes that offer convenient living options to those wanting a modern, hassle-free lifestyle.
“As it is a newly developed suburb, the houses on offer tend to be approximately 10 years old and built on smaller block sizes to appeal to families seeking low-maintenance living close to the city.”
Peaceful and with a high level of residential amenities, Woolner is a popular development in a region where rents and property values are expected to continue to rise, Sawyer says.