A year of truly staggering price growth has come to light in Darwin, with close to $80,000 added to the median house price
Following a tumultuous summer, economists and property observers can finally breathe a sigh of relief – at least they are better at being right than the meteorologists.
This isn’t just because of the cyclones, bush fires and record temperatures that have been thrown the way of the weather bureau. A look at January figures from RP Data reveals that Darwin property has done exactly what most pundits expected it to: grow, grow and then grow a little more.
In fact, at more than 12% growth over 2012, house prices haven’t just gone up – they’ve rocketed at light speed and are now galaxies away. Darwin’s current median house price of $560,000 is $80,000 up from what it was exactly a year before. It’s the kind of growth that makes for investor dreams, and hasn’t just been for one suburb, district or region of the city, it has been for the entire urban area.
“Demand is definitely strengthening,” says BIS Shrapnel senior residential manager Angie Zigomanis. “In the last year we’ve seen vacancy rates tighten considerably and so median house prices have shot up as well. The impact of the Inpex Ichthys LNG project has also been significant. When you’ve got a small city like Darwin, a $30bn project makes a big difference.”
Zigomanis adds that the Inpex Ichthys project is part of what has given the Darwin market a new lease of life. He says that the city had the strongest property price growth during and just after the GFC, partly on the back of new government administration offices moving into the area and projects that were still working their way through development. That growth hit a ceiling in 2011 and prices went backwards for much of that year. It was only in the autumn of 2012 that the city’s fortunes began to change.
When the Inpex deal was first announced, it was estimated that around 3,000 jobs would be directly created and that a stream of new rental accommodation would be required to meet demand from natural gas workers. This was reflected in improved confidence for the city. A Property Council-ANZ survey at the time found that confidence in the Northern Territory shot up 15%, putting NT’s confidence levels far above its fellow states.
Time has certainly shown the improved confidence to be merited, evidenced by the over 12% growth in the median house price over 2012.
A happy ending?
When considering the awesome growth in Darwin house prices, the obvious question is how long such value increases will last? And, according to Zigomanis, there is enough reason to be cautious.
“As the market was growing over the GFC, affordability eventually deteriorated. After the growth of the last 12 months it has probably deteriorated further. You have to ask, how hard can that affordability barrier be pushed? So, whether growth in 2013 will be single or double digits, it’s a matter of how much affordability plays a part.”