Quiet confidence defines market
Darwin’s market may currently be going through a slightly quieter period, but investors shouldn’t be hasty to write off the Top End’s capital just yet
Balmy, tropical Darwin is known for its relaxed, laid-back atmosphere. And right now the city’s property market is reflecting that, with some quieter trends. But while the market may no longer be blazing ahead full throttle, it would be wrong to write it off.
According to the latest RP Data CoreLogic Home Value Index
results, Darwin recorded a modest drop of -0.6% in dwelling values over the winter months. However, it is worth noting that its year-on-year result was growth of 5.4%.
Real Estate Institute of NT (REINT) CEO Quentin Kilian says there is a fair bit of stock on market at the moment and days on market figures have also drifted up. “So the market is exhibiting some quieter trends. But there is nothing to say this is a long-term trend here to stay, or that the market has softened dramatically.”
The fact that a recent ‘mega auction’ event, which featured 50 auctions in one night, resulted in over half of the properties being sold under the hammer indicates a high level of interest remains.
However, Kilian says sellers have had a good run of undersupply for some time.
This means sellers have been able to achieve high returns on their properties.
“Now, with more stock on market, buyers are being more astute about pricing because they have more choice in what is available to them. This means that sellers have to price their properties more appropriately for the current marketplace.”
The city’s rental market is also softer than it has been for some time. In the most recent quarter, there was a slight spike in the house vacancy rate. Rents are also down slightly and, while yields are softer, REINT data shows they are sitting around the 5.5% mark, which means they remain the strongest yields in Australia.
Kilian says these softer market trends could continue over the next couple of quarters. “I think we are unlikely to see an upswing before the end of the year, or until early next year … And, if the Reserve Bank indicates that they might increase interest rates, that could spark a buying surge.”
Strong economic climate
Darwin’s strong economic climate lends support to the future of its property market. According to the recent CommSec State of the States
report, the NT has the leading economy in Australia. It now ranks number one in four out of the five indicators.
Kilian says there is a lot happening in the NT at the moment. Inpex is still rocketing along; there are major potential oil discoveries underway; the mining sector is still active; and a huge new oil and gas service base is nearing completion. Further, the Federal Government recently announced an agreement with the US that will see more US forces based in Darwin for training.
There is even chatter about some of the majors now looking to Darwin as a base for their Asia-Pacific operations, Kilian continues. “This means there is currently momentum and real vibrancy in Darwin, and this means ongoing population and economic growth.”
SUBURB TO WATCH
Bakewell: Desirable suburb offers solid prospects for investors
As Darwin expands, more and more people are looking to the nearby satellite city of Palmerston for property. While Palmerston is now an established city in its own right, it is just 20 minutes from Darwin’s CBD.
One of the suburbs poised to benefit from this is Bakewell, which was developed in the 1990s. Sitting just minutes from the Palmerston CBD, it is a growth suburb, says Brad Morgan, from Ray White Palmerston.
“People buying in Bakewell can expect good capital growth as Palmerston expands even further. The fact it is a quiet family-friendly suburb, made up of a lot of courts which only see local traffic, makes it all the more attractive to many.”
Close to schools, shops, parks and with great public transport, the suburb’s properties are dominated by ground-level family homes. Many are on 800sqm blocks with a swimming pool or shed and plenty of parking.
There are no noticeably good or bad streets, Morgan says. But three- to four-bedroom ground-level homes, located in quiet courts or terraces with only local traffic, are most in demand.
Bakewell itself is an established suburb, but properties remain comparatively affordable, Morgan says. It also has a healthy rental market full of good-quality tenants, which provides high yields. “I believe that the value of properties will only rise as more families buy in the area and demand for houses increases. I think Bakewell will see great capital growth in future.”