Boom slows, but goes on
Recent market data suggests Darwin’s boom times might be slowing, but others paint a more positive picture of the NT’s capital city market
Feverish migration and related activity, followed by an inevitable slowdown in all areas, are the traditional hallmarks of a gold rush. Thanks to the NT’s resources boom, the last few years in Darwin’s property market have certainly displayed the supercharged characteristics of a rush.
Now, after several years of boom-time excitement, it could be argued that a slowdown might be getting underway.
According to the latest RP Data- Rismark February Hedonic Home Value Index results, Darwin was the weakest-performing capital city over the three months to January 2014, with a change in dwelling values of -1.2%.
In the Property Council of Australia’s recent annual ‘liveability’ survey, Darwin was once again rated the least liveable city in the county. This was in large part due to poor performance on housing affordability measures.
However, Real Estate Institute of NT CEO Quentin Kilian says the market remains buoyant and vibrant.
“It is a bit of a volatile market, but all the signs point upwards… I don’t see things dying off for quite some time.”
While the December 2013 quarter saw the highest volume of house sales since December 2009, units are now outselling houses in volume. This is largely due to the ongoing buyer and tenant preference for one-bedroom units, which should continue to dominate the market.
Darwin has a particularly young and mobile population, which is growing rapidly as increasing numbers of people move to the NT looking for work. This tenant pool doesn’t want three- to four-bedroom houses, which means that one-bedroom units remain the best type of property to invest in, Kilian says.
Further, the RP Data index results confirm that Darwin continues to record the highest rental yields of any capital city for both houses and units, at 6.1% and 6% respectively.
Kilian believes these high rental yields are unlikely to diminish due to the very limited availability of both land and stock in Darwin.
“Investors are the only big winners out of this situation. While there is an undersupply of stock, rental yields will remain high,” he says.
Given the current level of economic activity and population growth, which has been predicted to be as much as 7–8%, Kilian says the situation in the capital city should remain unchanged in the foreseeable future.
“The reality is that Darwin is a growing city. Development of onshore mining activity – like fracking – will ensure that population growth doesn’t drop off,” he says.
“So there will continue to be a steady supply of people arriving in town at a time when there is an ongoing undersupply of stock.”
An increase in available stock, along with a stabilisation of the extreme price growth the city has seen, would be good, Kilian adds.
“We want to see continued growth in prices, but the market needs to grow at a more organic, sustainable and manageable pace.”
SUBURB TO WATCH
It would be hard to find an area much newer than Bellamack. Dating from 2009, it is one of Darwin’s rural outer suburbs which have been developed in response to the rapidly growing city’s need for housing.
It sits in the Palmerston LGA where population growth is rocketing. By 2016, its population is expected to be over half the size of Darwin’s. Designed to cater for this growth, Bellamack is also set to benefit from it as the broader region continues to struggle with an undersupply of housing stock.
While Bellamack is 26.5km southeast of the Darwin CBD, it is well located on the arterial road network with easy access to the Stuart Highway, and is just 4km from the Palmerston CBD.
It is made up of a mixture of house and land blocks of varying sizes, and duplex homes. There is a range of shopping, schools, childcare centres, sporting facilities in neighbouring suburbs, and the area is well served by public transport.
Bellamack is also close to the Palmerston campus of the Charles Darwin University and the Robertson Barracks, which both provide reliable tenant pools.
The median house price is an affordable $310,000, but several houses in the surrounding area have recently sold for $1m plus. REINT CEO Quentin Kilian says that, given the ongoing undersupply, this indicates buyers are willing to pay increasing amounts for properties in the area.