Even though it escaped being ranked the weakest-performing capital in the country by CoreLogic’s Home Value Index for October 2019, Darwin is still in a slump despite improving decline rates.
Over the month to October, the city saw a pleasantly surprising increase of 0.3% in property prices. Its low median value has also meant a strong influx of first home buyers who are seeking to capitalise on the affordability of the market while not being limited by negative equity.
However, those looking for capital growth in their investments may have a while to wait before they see the benefits, as after a couple of ”reasonably strong” quarters the volume of house sales in Darwin was back in the red over the three months to September 2019.
“While this is very good news for potential buyers and investors, it is quite a blow to those seeking to sell or build capital value in their properties,” says Quentin Kilian, CEO of the Real Estate Institute of the NT in the state’s Real Estate Local Market Report for September 2019.
Nevertheless, inner Darwin did maintain a positive performance, with sales volumes on the uptick, along with median prices, which increased by 18.5% in that quarter. The Alice Springs region saw sales volumes plummet by 7.9%, but the median value increased by 2.9%.
Although house sales were largely down in the city, that wasn’t the case throughout the property market. In most of the Greater Darwin region, unit and townhouse sales were up by more than 30% compared to the previous year.
“Interestingly, the unit or townhouse market was where the activity was in the September quarter. This is the third consecutive quarter of sales growth in the unit market,” says Kilian.
“But at the same time as we are seeing sales volumes grow, the median price continues to fall substantially.”
Indeed, the median value of the market was 16.6% lower than in September 2018.
Rental yields have also begun to drop. In previous months, Darwin’s average rental return hovered at around 6%, but it has now slipped to 5.8%. The city also saw the biggest decrease in rents of all capital cities across Australia. This could in part be the result of renters deciding to become homeowners in the wake of lower mortgage rates.
SUBURB TO WATCH
STUART PARK: Decline eases in Darwin suburb
While the bottom still seems to be falling out of the Darwin market, the suburb of Stuart Park has seen a slowdown in its rate of decline.
Over the 12 months to October 2019, house and unit values only fell by 2.5% and 3.4%, respectively, which dropped the medians to just under $700,000 for houses and less than $350,000 for units.
This means units are quite low-priced while offering high yields of 6.3% on average. Nonetheless, unit rental rates are down to $400 per week after an 11.1% drop.
House rents fell more gently, by 4.2%, to a weekly average of $623.
Stuart Park also benefi ts from its location near the CBD as well as the beach.
Location: Stuart Park is just a short distance from both the Darwin CBD and the beach
Affordability: The median unit price is below $350,000, a reasonable price for the location