While Darwin recorded a slightly stronger performance than Perth, it remains a struggling market as affordability goes down
The outlook for Darwin remains grim as 2019 comes to an end, with prices staying low and very few prospects for growth in the near future.
While Perth was named the weakest performer in the Australian market over the three months to August 2019, Darwin came a very close second, recording a 1.7% decline in property values, as compared to Perth’s 1.8%. Vendor discounts also rose sharply from 7.7% in July 2018 to 8.2% after 12 months, highlighting the market’s weakness.
However, the regional pockets of the Top End performed better than the metro, with prices increasing over July and August 2019. Victoria and Tasmania were the only two other states to record this positive result.
Regional NT also reported low vendor discounts averaging 3.9% as of July 2019; however, this metric can be quite volatile given the low number of sales.
Nonetheless, the slower decline in this quarter indicates that things are improving in this market. More first home buyers have been taking out loans, with the number increasing by over 50% in the past 12 months.
Housing affordability slipped slightly in the June 2019 quarter, according to the Housing Affordability Report by the Real Estate Institute of Australia (REIA). The proportion of income necessary to meet loan repayments rose by 0.4 percentage points to 20.6% in this period. The opposite was true for rental affordability, however.
“Rental affordability in the Northern Territory improved over the quarter, with the proportion of income required to meet the median rent decreasing to 20.2%, a decrease of 0.7 percentage points over the quarter and a decrease of 2.4 percentage points compared to the June quarter 2018,” says REIA president Adrian Kelly.
Darwin retains the distinction of having the highest rental returns of all the capital cities. NT suburb Araluen also made it into CoreLogic’s Top Rental Performers list for September 2019, ranking 78th out of 100 suburbs.
This suburb is mainly populated by couples with children, The median rent comes in at $580 per week and generates an average return of 6.5%. Vacancy rates are healthy at an average of 2.8%.
SUBURB TO WATCH
BAKEWELL:
Bakewell is a high-yield suburb, with units offering investors an average return of 7.3%. It also has plenty of amenities, which makes it ideal for families.
The decline seems to be slowing down in this market, as house and unit prices fell by only 4.7% and 5.2%, respectively. Properties in Bakewell have become quite affordable for its location in the inner city of Palmerston. The median house value is barely above $400,000 and the unit median is well under $250,000.
While the rental market in Bakewell is not particularly strong, with rents falling by 6.7% and 5.7% for houses and units, rents for these properties average $420 and $330 per week, respectively.
Affordability: Median house and unit prices are under $400,000 and $250,000, respectively
Location: Bakewell is one of Palmerston’s inner-city suburbs – a convenient spot for professionals
