Darwin real estate is suffering on all fronts, but its apartment market is experiencing the biggest downturn
It was the property market that investors were clamouring to invest in just a few short years ago.
But in a testament to how quickly real estate cycles can shift, Darwin’s property market has become one of Australia’s least-appealing locales for investors in 2016, with property oversupply and backwards capital growth creating a myriad of headaches for landlords in the Top End.
“The Northern Territory is approaching the tail end of its mining-related construction boom and there are signs the economy is slowing, while population growth has dropped to the nation’s weakest,” confirms Deloitte Access Economics in its most recent Business Outlook
Part of this market shift has been due to slowing demand from China, where the drivers of growth are “increasingly shifting from construction to services and the consumer”.
“That weighs on construction prospects in Australia and trims the dividend in mining from past investment,” Deloitte adds.
Domain senior economist Andrew Wilson agrees, pointing to the fact that because the NT is a resource-rich region it is now one of Australia’s clear underperformers in terms of both real estate and economic growth.
The Darwin median house price has fallen over the past year, reflecting “reduced demand from interstate jobseekers and an associated weakening of local economic activity”, he says.
“Recent high levels of new apartment construction in the Darwin area also are a significant factor in weaker unit market performance,” Wilson says.
While housing growth has been subdued, the unit market is clearly the city’s weakest link, with sales activity slumping dramatically in the second half of 2015. Quentin Kilian, CEO of the Real Estate Institute of NT, says 64% fewer properties were sold in the September 2015 quarter than in the same period the previous year.
“It’s hard to say when the market will see an upward swing again, but you can be pretty confident based on history that it will gain ground again at some time,” Kilian says optimistically.
He further contends that Darwin’s depressed property market could present bargain buying opportunities for those who can withstand the current sluggish state of affairs.
“Of course, every cycle in the market opens opportunities, and at present these exist for people looking to purchase a property,” he says.
“With more stock available and lower interest rates, this is a great time to be looking at your first home or an investment property.”
SUBURB TO WATCH
Jingili: Generous homes and lifestyle near the city
A neighbourhood that endeavours to demonstrate Darwin’s ‘live, work and play’ motto, the suburb of Jingili has an abundance of community facilities and recreational services. Its growth in recent years indicates its popularity with buyers, who are attracted to the large lot sizes and Jingili’s proximity to Darwin, the airport, the university and beaches.
Situated 12km north of the capital city, which is an easy commute via the Orbital Link express bus routes, Jingili is a hotspot for workers seeking to upgrade to larger homes, or migrating from eastern states.
Casuarina Square, the largest shopping centre in the NT, is a drawcard mere streets from Jingili, luring buyers to the older northern suburbs and away from the newer southern neighbourhoods of Palmerston.
Darwin’s mining industry has caused a boom in housing demand in recent years, although the past 12 months have seen values stall. Buyers have taken advantage of the plateau in prices, with Jingili recording its highest number of transactions in the same time period.
The NT’s generous first home buyer grants are attracting young buyers into the housing market, and Jingili’s family-sized detached homes are relatively affordable at a median price of $590,000.