Dwelling prices in the Top End are freefalling faster than weekly rental rates, causing rental yields to skyrocket
Darwin's values continue to go south, due in part to a lack of long-term value.
“Unfortunately for Darwin residents and investors, the good news doesn’t appear to be around the corner. Property prices and rents now seem to be in freefall, with Domain’s March Quarterly Report suggesting double-digit annualised declines,” says Propertyology managing director Simon Pressley.
According to CoreLogic, Darwin was the only capital city to see rental rates drop in the first quarter of the year, traditionally a season of growth in the rental market. The decline in the rental market is a blow to overall values, and it’s a bad sign for Darwin, especially when its property peer, Perth, seems be clawing back up the ranks.
As of March 2018, the median rental rate across the NT was under $480 per week. Surprisingly, the metro actually underperformed compared to the regional areas; while rental rates in Darwin fell over the quarter and were lower overall compared to 2017, they were stable in the regional pockets and increased over a 12-month period.
As a whole, across NT rental yields stabilised over 2017–18; in fact, Darwin’s gross rental return of 5.8% is the highest among the capital cities.
Buyer activity increased
CoreLogic notes that first home buyer numbers have gone up – in February 2018, first home buyer commitments were up by 26.8% compared to the previous year. The number of settled sales in Darwin also increased reasonably, by 3.6%.
“Affordability is now driving an upward swing in property sales both in Perth and Darwin as these two markets have undergone a major downward correction over the past two to three years,” says Shane Kempton, COO of Professionals Real Estate WA and NT.
“Many buyers in these two capital cities have been sitting on the sidelines waiting for the market to bottom, and many understand that now is the time to buy.”
Kempton’s firm predicts that Darwin will continue to see an uptick into the autumn and winter. “Both Perth and Darwin have also experienced a major decline in new home builds over the past two years, and buyers realise that the supply of property might well tighten over the next 18 months, leading to an upward pressure on prices,” Kempton says.
SUBURB TO WATCH
MILLNER:
The suburb of Millner is regarded as one of the hubs of growth in the northern suburbs region.
It is the site of Darwin’s second-largest shopping centre, Homemaker Village, which contains many specialty shops. It is also bordered by three major arterial roads – Bagot Road, McMillans Road and Trower Road – and Darwin International Airport is on the edge of the suburb.
Millner seems to embody Darwin’s status as a city with limited growth but high rental yields. The average rental return in this suburb is 6.8% for apartments, which come in at low median price of $342,364 following a five-year run of negative growth.
Amenities: The popular shopping destination of Homemaker Village is located in Millner
Accessibility: Millner is close to three major roads and Darwin International Airport
