Darwin continues downslide in the face of economic problems
With the downturn experienced by Darwin’s mining sector, the property market continues to struggle
According to the Domain House Price Report
, house prices saw a significant decline of 4.9% in
March quarter 2016, sustaining a trend that began last year. While the drop in unit prices was gentler, they were not spared as unit prices dipped by 4.1%.
In fact, Darwin reported the poorest performance out of all the Australian capitals, with house and unit prices decreasing by 3.3% and 8.3%, respectively, over the previous year.
In an NTNews.com.au report in April, Quentin Kilian, CEO of REINT, commented that house sales were at their lowest since the inception of the Institute’s data-gathering operations in 1999. He attributed this in part to the elimination of the First Home Owner Grant for buying established homes back in January 2015.
According to OnTheHouse.com.au market analyst Eliza Owen, rental rates for both types of properties dropped in Darwin. However, over a 12-month period the 11.34% increase in the rental yield of units exceeded that of houses at 6.72%.
“In some places, I believe units will suffer greater losses than houses because units were developed in response to speculative investment, as opposed to desirability for people to live in them,” she explains. In the countryside, the decrease is even higher for houses. By contrast, the price decline for regional units was less than that reported for the metro.
Domain chief economist Andrew Wilson says “the Darwin unit market remains vulnerable to further price falls as a result of recent significant development of new apartment complexes”. In the country, units have often been developed on large blocks with many other apartments instead of on boutique blocks that are “more quiet and spacious”. When investor demand fades, prices of units far from the CBD will drop as well. There is also limited demand for fly-in fly-out housing, which has been regarded as another reason for Darwin’s weak showing.
REIA president Neville Sanders says the NT has seen the “largest decrease of 2%” in terms of number of owner-occupied finance commitments. But in spite of the generally unfavourable outlook for the territory, Tod Peterson of Peterson’s Property Search says Darwin’s property market cycle is the opposite of that experienced by bigger markets such as Sydney and Melbourne. Thus, the region’s status may still improve this year.
For instance, the highly affordable suburb of Katherine South reported 18% growth in the past year. Its 2% growth this quarter indicates it is on an upswing likely due to its low prices attracting investors.
SUBURB TO WATCH
Braitling: Alice Springs suburb takes a dip
Driving just 3km north of Alice Springs will take you to the suburb of Braitling, which mainly attracts middle-aged residents. It is close to destination spots, like the Adelaide
House Museum, and to the Todd Mall Markets. Residents also have easy access to the CBD via the local buses.
However, house prices recorded a dip of 5.1% over the past 12 months as the vacancy rate rose to 3.4%. Units also fared poorly, with negative growth of 6.2%. As a result, Braitling is one of the lowest-priced suburbs in the NT.
With the limited number of properties on the market and low demand, Braitling does not have very good capital growth prospects. Nonetheless, OnTheHouse.com.au experts believe the suburb may yet experience slight growth in the next decade.
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