Darwin still has a way to fall
Although Darwin properties have generally reported growth in the March 2017 quarter, most experts feel that the market remains volatile.
“There’s likely more downside there to go – still another 12 months if not more,” says Angie Zigomanis, senior manager of residential property at BIS Oxford Economics.
“Darwin’s obviously a much smaller city, so when you go with a big project like the LNG plant there, it has a big impact. Short term, it has a big impact with the investments wrapping up and people arriving, and it also has a big impact when people leave, so we see more downside to the Darwin numbers.”
A constant and significant part of this instability is Darwin’s strong ties to the resources sector, which strongly affects the economy.
“Darwin’s current economic downturn has led to high unemployment rates and a slowdown in population growth,” says Michael Yardney, CEO of Metropole Property Strategists.
“There are few growth drivers on the horizon.”
Investors drive demand
Yardney regards the NT as primarily an investor-driven market. This idea is supported by the chairman and owner of Century 21 Australasia, Charles Tarbey.
“Darwin is a market unto its own in Australia,” Tarbey states.
“It possesses a strong connection to both Australian and Asian markets. From an investor’s perspective, it is now holding stronger prospects.” Investors are likely drawn to the rising demand for rental properties in Darwin, which is accompanied by high yields.
“Vacancies are headed in the right direction, which is a good sign,” says Glenn Grantham, general manager at Raine & Horne Darwin.
“However, it means investors shouldn’t be complacent about pricing and presentation.”
In addition, efforts are being made to enhance Darwin’s appeal as a city, as the Museum and Art Gallery of the Northern Territory recently proposed the construction of a new museum in Darwin’s Civic Precinct. This could serve to facilitate investment in the tourism industry and increase the number of amenities in the area.
Even though this project is still some way off from becoming a reality, Darwin is already showing an upside, even if it is only for the short term.
SUBURB TO WATCH
Wagaman: Northern suburb continues freefall
Just 14km north of Darwin lies the suburb of Wagaman. It is one of the northern suburbs of the NT capital.
In line with the state’s decline, Wagaman has seen its prices fall over recent years. In the last 12 months, negative growth of 5.4% was reported, pulling the median house value down to just over $530,000.
However, this may be a blessing in disguise as the decreased prices could spur investment, especially given Wagaman’s prime location and the fact that returns are high at an average of 5.4%.
Residents have access to a primary school, a local park, and a shopping centre in the suburb, while neighbouring Casuarina and its large shopping hub are within close proximity.
