Darwin remains one of the weakest markets in the country, but the rate of decline may slow in the years ahead
It’s hard to feel optimistic about Darwin, but despite the slump it’s in, there continues to be hope that the tides will turn.
With prices falling lower and lower, it is unsurprising that nearly half of the sales recorded in Darwin in 2018 were of properties priced below $400,000. CoreLogic pointed out in its Hedonic Home Value Index for March 2019 that the annual rate of decline in Darwin had worsened due to job market instability and credit scarcity.
The Top End also recorded the weakest rental market in the year to February 2019 as rents nosedived by 6.1%. However, the city’s values recorded a slight increase of 0.2% in the last 12 months.
Regional pockets of the NT fared a bit better, with 39% of sales made up of dwellings in the $400,000–$600,000 price range. Overall, the sales volumes for houses in Greater Darwin increased by 14%, with sales in Palmerston comprising a big part of this.
“Vacant land sales were up by 14% in the December 2018 quarter – 40 house-sized blocks that were under 600sqm in size were sold, with over half of these sold in Palmerston at a median price of $167,000,” says Quentin Kilian, CEO of the Real Estate Institute of the NT.
Woes in the rental market
At the same time, sales volumes are falling in Alice Springs, Katherine and Tennant Creek. Median prices are also dropping like flies all over the NT.
“Across the board, we saw, yet again, lower median prices for houses in all jurisdictions except Alice Springs, with the median price for the Greater Darwin market falling by just under a percent to $493,750,” Kilian says.
“To put this in perspective, this median price is just $6,000 less than the median price of a house in Darwin in September 2009.” Another pressing problem Kilian has seen is the steady rise in vacancy rates.
“The unit vacancy rate for Darwin and the northern suburbs sits at 9.2%, which is by no means the worst it has been, but a comfortable position for the vacancy rate should be around the 2–3% mark at most.”
Alice Springs has the lowest vacancy rate at 3.9%, which is still outside the ‘balanced’ band of 2–3%.
SUBURB TO WATCH
COCONUT GROVE: High yields in a struggling market
Despite its weak rental market, Darwin boasts the highest rental yields in Australia, which is evident in the market performance of Coconut Grove.
Unit rental returns are quite strong at an average of 6.1% in December 2018, while house yields come in at 5.3%. Growth continues to be negative, however, with the prices of both houses and units decreasing by 9% in the 12 months to February 2018. This has made units extremely affordable at a median value of under $300,000.
Coconut Grove is situated north of Darwin and was named after the coconut grove on the coast. This suburb is bordered by several roads.
Accessibility: Coconut Grove is surrounded by Progress Drive, Bagot Road and Totem Road
Yield: Coconut Grove offers high average yields to investors, at 6.1% for units and 5.3% for houses
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