The Top End sees a boost in rental yields, even as property prices continue to fall
Darwin's capital growth prospects remain very low coming into 2018; however, the rental market is looking up.
The property market continues to perform poorly, with dwelling prices decreasing by 6.5%. With no major growth drivers on the horizon, investors would do well to steer clear in the near future, warns Michael Yardney, CEO of Metropole Property Strategists.
“As opposed to the east coast capital cities where many jobs are being created, Darwin had a net loss of jobs last year, showing how its economy is languishing,” Yardney says.
For Propertyology managing director Simon Pressley, Darwin’s hope is in recognising its key economic sectors.
“Darwin is a location with very specific and unique assets, but there currently isn’t any investment, public or private, into major projects,” he says.
“Someone needs to help Darwin stakeholders find their voice and to develop an economic development that realises its strengths in tourism, natural resources, the military and agriculture.”
Tenants are Darwin’s market
In Palmerston, many first home owners are opting for new house and land packages instead of strata duplexes or townhouses, according to Herron Todd White’s Month in Review report for December 2017. Given the high levels of supply and the low population growth, the unit market has gone downhill.
Nonetheless, the first home buyer activity observed is a positive sign.
“The positive signs are the increased sales activity and while for many participants these sales are confirming a loss, it does provide opportunities for first home owners and there has been a marked reduction in cost of living pressures,” the report states.
Taking advantage of Darwin’s transient population could be a smart move, given that there is an abundance of tenants. According to CoreLogic’s Hedonic Home Value Index for December 2017, rental rates in Darwin fell by just 1.5% in that year. As a result, rental yields hit an average of 5.9%, the highest since July 2015. This rate of return is also the highest across the capital cities.
SUBURB TO WATCH
BAKEWELL: Units attract top yields
In the heart of Palmerston City, prices continue to spiral downwards in the suburb of Bakewell.
House values fell by 9.3% in the year to December 2017, logging a median price of $470,575. Units fared better, with prices slipping by only 4.2% in comparison, to a median value of just over $300,000. The average yield for this type of property is a whopping 6.7%.
Bakewell is known for its parks, the largest of which borders the neighbouring suburb of Gunn. It is also only about 3km from Palmerston, providing access to Palmerston Shopping Centre and various schools, including the Charles Darwin University’s Palmerston campus.
Affordability: Bakewell apartments are on the market at a median price of $313,036
Accessibility: The suburb is close to the Palmerston CBD and its many conveniences
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