Darwin has one of the tightest housing markets in the country: the Real Estate Institute of the Northern Territory reported in late 2012 that the average rent in the greater Darwin area was about $600 a week for a three-bedroom home.
A new Singapore
The federal government’s Asian Century white paper singles out Darwin as having the potential to evolve similarly to Singapore.
“Darwin has great opportunities to become a world-leading centre for engineering, financial, medical and education services,” it states.
The Northern Territory capital was earmarked for population growth via the education market to Asian students and the booming natural resources sector. Projects such as the $34 billion Inpex gas plant site are boosting its economy and population and, combined with a low housing supply, have caused a tight housing market and high rental yields.
Jeremy O’Donoghue, director of First National O’Donoghues, says the housing market had picked up over the past year.
“Supply is OK for the time being, we haven’t seen a lot of capital growth but the volume of sales is very good,” he says.
“Last year was quiet, this year has been a lot busier, next year is when we expect a lot more growth to come through.”
Top-end suburbs include Parap and Bayview, where a family home sells for more than $1 million. Karl Secondis, director of One Real Estate, says auctions are gaining traction at the prestige end of the market compared with 2011. Secondis is marketing a Bayview property expected to fetch $1.3 million to $1.4 million at auction in a fortnight. He says the vendors paid about $700,000 for the four-bedroom home eight years ago.
Days on market are falling, and homes in the $450,000 to $650,000 bracket tend to sell in a range of one day to three weeks.
“Buyers are jumping at anything around the $500,000 to $520,000 mark, especially the first home buyers,” he says.
Affordability has been an issue, which has prompted the Northern Territory government to grant stamp duty exemptions for first home buyers on properties up to $530,000.
Parents are increasingly choosing to buy units for their children to rent because of the high entry point to the market and scant number of rental homes.
Australian Property Monitors records Darwin’s median house price at $559,000 and the median unit price at $481,000, which Propell National Valuers’ Paul Eustance says should steadily grow.
“It’s not a white-hot market but it is a strong market, underpinned by the limited supply,” he says.
“Supply levels won’t increase any time soon, both house prices and rentals will increase.”
He says that interstate and Asian investors are increasingly investing in apartments, and off-the-plan projects are selling within weeks of coming on the market.
O’Donoghue is marketing 40 off-the-plan apartments for $500,000 to $700,000, which he says will command weekly rents of $600 to $800, an encouraging sign in the investor market.
A rising number of interstate buyers are purchasing sight unseen, a trend last common in 2003. Mum and dad investors with a Darwin contact ask them to view a property, buy it and then enjoy good returns. Local investors nearing retirement are getting in now as the market climbs, and will rent the property until they are ready to downgrade themselves.
The defence population is also active in the rental market. Secondis says that November and December are ideal for renters seeking a lease as this is before defence postings are assigned in December, when the already tight rental market becomes even tighter.
Real Estate Institute of the NT chief executive Quentin Killian says low vacancy rates equate to only 75 or 80 houses available to rent. “Darwin is the untapped diamond in the rough,” he says.
Killian says the Darwin business community has had a long-held belief in building strong links with Asia to achieve economic growth.
He says population growth has doubled from 2.4 per cent to 4.2 per cent, and the biggest challenge facing Darwin property is supply, which makes it particularly tough for renters.
“Darwin never really had a property slump, even when markets were in freefall in the other states during the financial crisis,” he says. “Darwin prices never fell below $500,000.”
Ray White Darwin’s Daniel Harris says the market is the most exciting in Australia and, given the lack of confidence internationally, perhaps in the world.
“The [prestige] end is picking up but it’s still not flying, [but] the cheaper homes are going crazy,” he says.