Darwin’s market may have come off its spectacular recent highs, but the market can still offer up a host of opportunities for canny buyers.
Sitting on the northernmost reach of Australia, Darwin remains somewhat of an outpost. As a result, the city tends to move the beat of its own drum, often confounding expectations along the way.
And so too does Darwin’s property market.
Towards the end of 2014, data showed the city’s market was slowing, but the latest CoreLogic RP Data Home Value Index recorded a rise in home values in all capital cities except Darwin, which recorded a -0.6% fall. Further, over the final quarter of 2014, home values in Darwin declined by -1.7%.
CoreLogic RP Data head of research Tim Lawless says that, while Darwin has had the highest rate of capital gain of all the capital cities over the past decade, growth in dwelling values trended lower over the second half of 2014.
In his view, prospects for further growth in Darwin over 2015 are diminishing. This is due to a wind-down in the major infrastructure projects that are currently underway in the Northern Territory.
“The city’s housing market is still providing the highest gross rental yields of any capital city market,” he says. “However, it is likely that investor demand will taper in line with capital growth.”
Don’t count the city out yet, though. Just like any rebel, this tropical hub is one prone to defying forecasts.
For example, according to the latest CommSec State of the States report, the Northern Territory has overtaken Western Australia to become the joint number one performing economy in the country.
In fact, the Northern Territory is top on five of CommSec’s key indicators, including the job market – thanks to the huge gas projects that continue to drive the territory’s economy.
Unfortunately, the territory lags on population growth, which affects home building activity. The report adds that attracting labour to the Top End remains a constraint on growth.
REINT chief executive officer Quentin Kilian agrees. Economically, there is a lot happening in Darwin and the territory, he says. “We just need to get more people up here. Migration tends to be based around the flux and flow in the resources sectors. We need to get a steady migration stream.”
However, Kilian is upbeat about Darwin’s property market, due to the overall strength of the territory’s economy.
While he concedes the market has been a little slower in recent months, he does not feel there is cause for concern.
“Agents tell us that properties are still selling and well, but in the lower price bracket. So areas and properties that offer buyers a good value proposition are in demand.”
He adds this means there are currently good buying opportunities for investors in Darwin, particularly in some of the older suburbs, as well as in nearby Palmerston.
SUBURB TO WATCH
Karama: Poised for growth
Potential is the name of game in Karama. Traditionally a working-class area, the sell-off of former Housing Commission properties combined with Darwin’s expansion have had a positive impact on the suburb’s market.
Sitting in Darwin’s outer north, just 11 kilometres from the CBD, Karama has a solid record of growth. While the median house price remains comparatively affordable, it has posted average annual growth of 10.2% in recent times.
An abundance of parkland, combined with a range of schools and decent local amenities, has made the largely residential suburb increasingly popular with young families in recent years.
Karama is five minutes’ drive from the airport and close to both Casuarina shopping centre and the Palmerston CBD. This adds to its convenience, particularly for FIFO workers, and means there are nearby employment hubs to act as economic drivers.
Investors should note that Karama also has a strong rental market. It has a vacancy rate of 1.61%, which shows demand, and current yields are 6%.
Lianna Georges of Colliers International NT says that three-bedroom family homes, often on large blocks of land, dominate the market. Many such properties have scope for renovation, and as a result, the suburb is experiencing regeneration.
Sought-after streets like Brazil Crescent and Kalymnos Drive have good proximity to parklands, schools and the local shops.
