Darwin’s woes set to deepen as the market fundamentals soften further
It’s not the kind of news you want to read as an investor, especially at the start of another year. But unfortunately, there’s no way to sugarcoat the current sad state of the Darwin market.
During the past 12 months, dwelling values in Darwin dropped by 3.6%, the second biggest loss of all capital cities, behind Perth, according to the latest CoreLogic RP Data stats. This translates to an estimated $18,154 value loss in dollar terms.
Just like Perth, the prognosis for Darwin’s market over the next 12 months is not looking positive, with experts forecasting a further drop in values and rental yield.
“Darwin being a smaller market has suffered a lot more,” says Andrew Wilson, Domain senior economist. “While Perth is showing signs of bottoming out, I can’t see that in Darwin at the moment. There’s a lot of fragility there at the moment.”
While Wilson believes the market will turn around sooner rather than later, he doesn’t see it happening this year.
“The unemployment rate is still very low in Darwin, but there’s been a significant impact of the end of the FIFO in Darwin, particularly at the management level as a source of rental and property purchases. I think there’s still some downside to Darwin. It still has affordability issues, despite prices coming back a bit. It’s still an expensive proposition.”
The most vulnerable segment is the unit sector because of oversupply, according to Wilson.
“Vacancy rate for units is the highest of all units or houses of any capital city,pushing up around 6% at the moment. There’s no sign of relief because there’s no demand from both renters and buyers. It’s question of when demand will soak up these properties.
“At the moment, Darwin is in a painful adjustment phase because of the end of the FIFO. It’s a volatile market. There’s still some adjustment to go for both prices and rents this year. I think at this stage Darwin is the only capital city that will record negative growth this year.”
SUBURB TO WATCH
Millner: Price falls opening up buying opportunities
Millner, a highly desirable Darwin suburb, is located right in the middle of everything. It’s just five minutes from the airport, five minutes from the hospital, 10 minutes from town and five minutes from the university.
Therefore it attracts younger renters and those seeking more affordable rental accommodation near the CBD.
Millner is one step removed from the most prestigious suburbs in the area. Nightcliff and Coconut Grove to its west and Brinkin and Casuarina to its north continue to command premium prices.
Investors can get into the market at a much more reasonable level in Millner, especially now that prices have fallen.
It’s a family-friendly suburb and home to the Territory’s secondlargest shopping mall – a big-box retail supercentre called Homemaker Village – and is also adjacent to the popular Darwin Water Gardens.
