The bottom continues to fall out from under Darwin as property prices yet again dropped in the three months to November 2019, causing it to be once more branded as the poorest performer among Australia’s capital cities, after briefly relinquishing the title to Perth.
“The Darwin property market peaked in August 2010 and is still suffering from the effects of the end of our mining boom, with a very soft employment market and lack of migration and infrastructure spending,” says Kate Forbes, national director of Metropole Property Strategists.
“The small size of the Darwin market makes it more susceptible to local events, and it typically has a higher and more variable vacancy rate, a product of a large transient working population.”
The lack of economic promise has been a major factor keeping investors out of Darwin. Meanwhile, with each drop in dwelling values the market has become progressively more affordable, to the point where properties in the capital cost less than those in regional areas.
“With the Darwin median unit price at $294,000 and the Alice Springs median unit price at $327,000, it now costs more to purchase a unit in Alice Springs than in Darwin – the first time this has occurred in 19 years,” says Quentin Kilian, CEO of the Real Estate Institute of the NT, in the Northern Territory Real Estate Local Market Report for September 2019.
While the median unit price in the capital has fallen in the last 12 months, the median value of housing blocks has increased; however, the volume of land sales has dropped, indicating a lack of demand.
Nevertheless, CoreLogic head of research Tim Lawless believes 2020 could be a turning point for Darwin, although the state does still need to address some important economic problems in order to stabilise.
“Darwin is now the most affordable capital city housing market, both on a raw median value measure and relative to household incomes. It’s also the capital city showing the highest gross rental yields,” he points out.
“The combination of a low entry point and strong cash flow, with the potential for medium- to long-term capital gains, could start to lure more investor interest into this market in 2020.”
SUBURB TO WATCH
GILLEN: High returns in Alice Springs
Rental yields are very attractive in the Alice Springs suburb of Gillen. Houses and units recorded average gross returns of 6.0% and 7.8%, respectively, in the year to November 2019.
These significant returns are a glimmer of positivity in the NT’s weak market. But while rental rates held steady to an average of $500 per week for houses, unit rents slipped by 3.2% to $380 a week. The house market also got away with a small drop in values of just 1.1% in the year to November. On the other hand, unit prices dropped by 6.0%.
There are many natural attractions in the vicinity of Gillen, like Todd River and the Alice Springs Desert Park.
Nature: Gillen is close to Todd River and the Alice Springs Desert Park
Yield: Both houses and units offer strong yields of 6–7% in Gillen
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