Buying property in Darwin hasn’t been this affordable in a very long time. Only 4 years ago Darwin briefly overtook Melbourne and sat 2nd only to Sydney for the highest median property price in the country.
The top ends capital is now on the verge of becoming 2nd only to Hobart for the lowest median price in the country. A severe fall from grace indeed.
As a general rule homes in Darwin are now selling for incredibly similar values as they were in 2008. Some properties are being sold for less than were purchased for a decade ago.
A combination of factors has led to the sustained slowing down in the Darwin economy, such as the winding down of the INPEX LNG project and a shrinking of the local Territory population along with a marketplace that is wary of making major personal financial investments at the moment, which is not being helped by draconian bank lending policies that were aimed at slowing down big City’s like Sydney & Melbourne.
2016 was widely regarded by most property pundits as the worst year Darwin property has seen in several decades. 2017 was marginally better but the reality is with prices dropping another 8% +it can only be categorised as abysmal.
The present market can still generally be characterised as a buyer’s market with property prices depressed however in some rare good news there is certainly cause for some optimism that the worst of the correction is over with sales volumes increasing slighly & a significant increase in buyer activity.
Being the largest real estate company in Darwin continuing to sell the most properties year on year than we are fortunate that our research provides a good feel for market trends given our sample size.
Our research indicates that ‘time on market’ is improving substantially over the past few months and the amount of people turning out at opens, auctions and making offers is the highest it’s been since late 2014.
Contributing to the extra sales no doubt is a greater percentage of sellers understanding of the shift in prices that has occurred & pricing their property accordingly.
We are also seeing more and more buyers starting to search identifying the opportunity phase of the property clock we are currently in. (Herron Todd White property clock pictured below)
At last check volumes had increased by 26% from 12 months ago & we’d expect this trend to continue in 2018.
Sales are primarily dominated by owner occupiers who represent 92% of REC’s sales in 2017.
In contrast, subdued rental growth & lack of confidence continues to deter property investors from buying and investing in the Darwin market, instead chasing larger capital gains in the eastern and southern states.
Investors currently making up 8% of our transactions in 2017. To put this in perspective during years of high growth such as 2013 that figure has been as high as 48%.
Having this figure back up above 25% is critical to sustained stability & growth in the top end market which has historically been a favourite to interstate investors chasing cashflow with Darwin holding the capital city title for highest rental yields in the country for the best part of the last decade.
Some good news for investors with the core logic statistics showing that rental yields are at 5% on houses (3 bedroom) in Darwin and 4.8% on units. These remain much higher than most other Australian capital cities.
Core Logic is showing average house yields in Sydney at 2.7 %, Melbourne at 2.6 %, Perth at 3.6 %, Adelaide at 3.9 % and Brisbane at 4.1 %. Only Hobart is on par with Darwin with gross rental yields on houses at 5.1 %
I’m often asked ‘what’s the Darwin market doing’ to which I often reply ‘which sector are you referring to’. For several years we have seen a significant imbalance with supply outweighing demand, but this is now starting to equalise in some sectors of our market.
Leading the charge & showing definite signs of stabilisation is Darwin’s Northern Suburbs which are without question the strongest sector of the market.
We are back to averaging over 40 groups attending our advertised properties throughout a marketing campaign for our Northern Suburbs houses.
This is something we haven’t seen for years & having competitive bidding/ offers is becoming normal again. It’s a bold call but our research concludes that this sector of the market has bottomed and it’s now in a recovery stage.
This is flowing onto inner Darwin suburbs house sales where active buyer numbers & sales volumes have also increased, however many dwellings are still beyond the reach of purchasers with the majority only having or willing to spend up to half a million.
Areas where supply can be easily influenced through new construction such as Palmerston & inner city units have been the worst hit segment of the market with a considerable supply still applying significant downward pressure on prices. These conditions are compounded by a lack of investors entering the market. The rental market continued to soften but the promising sign was that vacancy rates appear to have stabilised. This should assist with confidence for investors who are critical to a recovery occurring anytime soon in this sector of the market.
Overall, the current property market presents a great opportunity for purchasers looking to secure a property.
We look forward to seeing what 2018 produces, it’s inevitable there is some more pain to come but the early signs of a recovery in some sectors of the housing market are very encouraging.
If you have been considering getting into your first home, or upgrading to something a little bigger and grander, then this is definitely the time for you to be speaking with your REC agent.