It’s a buyer’s market in Darwin’s property market, particularly in the apartment sector, which has become so saturated with stock that vendors are increasingly selling at a loss.
The median unit price in inner city Darwin is $543,355, reports Herron Todd White in its Month in Review for October 2015, while the NT capital is now officially listed as a “declining market” on HTW’s National Property Clock – meaning there could be scope for values to fall further.
“With many units now listed for extended periods, the market has become saturated with older units and consumers are now aware that it is a buyer’s market,” explains Herron Todd White.
“Properties purchased in this category during the peak period between 2013 and 2014 have likely decreased in capital value… and rents have softened along with capital growth.”
As evidence of this, Herron Todd White point to a recent inner city unit in Larrakeyah, which was purchased in 2013 for the low $400,000s.
“This has recently re-sold at the high $300,000 mark and unfortunately, this is not an uncommon event, with many agents now encouraging vendors to be realistic about their expectations of what their property will achieve if sold in today’s market.”
Landlords lament as properties sit empty
Evidently, it’s not just Darwin’s backwards property price growth that has the city’s landlords in a spin.
It’s also the fact that Darwin’s apartment market is experiencing some of the highest vacancy rates in the country, with the Real Estate Institute of the Northern Territory confirming a vacancy rate of 6.9%.
This equates to around one in 14 investment properties sitting empty – making it easy to see why real estate agent Christine Habel from Elders Real Estate Darwin is lamenting the state of the local market.
“At the moment, the Darwin market is the worst I have seen it in a long time,” Habel says.
“In the lead up to Christmas, it’s going to remain much the same. Everything has gone down, from rentals to sales, predominantly in the $600k and below market.”
Continuing grief from government grant changes
There are myriad reasons why the property market in Darwin – and in its sister satellite city, Palmerston – is suffering, not least of which has been the impact of changes to the First Home Owner’s Grant.
This, coupled with government incentives offered to entice purchasers to buy off the plan units or build brand new homes, has had a significant detrimental impact on the established housing market, Habel says.
“I think it’s got a lot to do with the fact that it’s forcing first homeowners to buy brand new. The second-hand housing market has gone stagnant and sellers are quite frankly losing money as a result,” she says.
“Some are predicting a turnaround within the next 18 months or so but like always, no one has a crystal ball. However, I remain optimistic.”
One positive factor in the city’s favour is the fact that the NT boasts the lowest unemployment rate in Australia, with government figures placing it at just 4.2% in August 2015.
This almost half of the rate recorded in South Australia (7.9%), and a decent amount lower than NSW, Victoria, Western Australia, Tasmania and Queensland, which are all 6%-plus.
Sources:
Interview with Christine Habel, Elders Real Estate Darwin
Herron Todd White Month in Review October 2015
Australian government unemployment statistics
Northern Territory Real Estate Local Market Report
The information in this article is general information only and does not constitute financial or legal advice. This does not take into account your personal circumstances and accordingly you should seek independent financial and legal advice before taking any action, or refraining from taking any action in reliance on any information contained in this article.
