While it hasn’t been labelled Australia’s weakest market over August–September 2019 (a distinction taken by Perth), Darwin remains near the bottom of the pile, with dwelling values continuing to drop as the city’s economic prospects remain bleak.
“Sadly, economic conditions have progressively deteriorated for a few years, and now, for possibly the first time ever, the population is actually in decline. It will continue to be a poor time to invest in Darwin until sustainable economic development initiatives are put in place,” says Propertyology managing director Simon Pressley.
The poor conditions have made vendors reluctant to put their properties on the market, given the expectation of loss. CoreLogic’s most recent Pain and Gain report notes that Darwin is the least profitable of the capital cities when it comes to property sales, with nearly half of all dwellings on the market selling at a loss.
Investors have also been more likely to unload properties at a loss (17.4%) than owner-occupiers (11.3%). As a result, the number of new listings in Darwin plummeted by 36% compared to the previous year, according to CoreLogic’s Property Pulse report for 10 October 2019.
However, the rising affordability of property could end up turning things around, as the rate of decline has slowed down.
“Although housing values are now consistently tracking higher, at least at a macro level, the national index remains 6.8% below the October 2017 peak, indicating that buyers still have some time to take advantage of improved housing affordability before values return to record highs,” says CoreLogic head of research Tim Lawless.
“Markets outside of Sydney and Melbourne aren’t showing the same recovery trend, but most areas have either seen a reduction in the rate of decline or are seeing a modest trajectory of growth as low mortgage rates and a slight loosening in credit policy support buyer demand.”
In terms of rentals, CoreLogic’s Home Value Index for September 2019 indicates that Darwin was the only capital city other than Sydney to record a decline in rental rates over the previous 12 months, with a drop of 2.7%, and it was one of five capitals that experienced a rate decline during the September quarter. Even though rental rates are going down, one positive Darwin continues to hold on to is its strong rental yields, which remain the highest among all the capital cities.
NIGHTCLIFF: Affordability rises as values fall
Property values continue to trend downwards in the suburb of Nightcliff, north of the Darwin CBD.
The median unit price dropped below $300,000 following a 3.3% decline in prices in the year to September 2019, maintaining the negative trend of the past five years. The same was true for median house values, which fell to under $650,000 after prices slipped by 8.9% over the same period.
Nightcliff held on to a strong rental yield of 5.4% for units, but rental rates fell to $330 per week – a decline of 5.7%.House rents plummeted by 12.3% to an average of $535 a week.
Prices: The median unit price dropped below $300,000 after yet another fall in values
Rent: Weekly rents for both houses and units have decreased signifi cantly in the last year
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