While property prices are still far from what they were during the boom period, Darwin is slowly moving into the black, with an increase in dwelling values over the month of January 2020.
CoreLogic’s Home Value Index notes that this follows a general trend of positivity observed across Australia’s capital cities; however, it’s going to take Darwin a long time to climb back up, as the capital city subregion of Darwin remains in the red.
Furthermore, while Darwin remains the capital city with the highest-yielding rentals, the high returns of 5.8% are generally attributed to the decline in property values rather than the strength of the market.
Darwin investors are still feeling a blow whenever they unload a property, with CoreLogic’s Pain and Gain Report for September 2019 indicating that just a little over half of the homes on the market sell for more than the purchase price. So, many property owners are choosing to hold on to their properties rather than sell them at a loss, with units in particular not expected to make money.
“It doesn’t seem like the mining sector, while it’s helping WA, is doing the same in Darwin. It’s sort of recovering now, but I don’t see a big recovery happening,” says Domain economist Trent Wiltshire.
Herron Todd White’s Month in Review report for February 2020 expects more of the same from Darwin throughout the year. It continues to have many of the same issues that have held it back over the past year, such as a weak economy.
Although some infrastructure projects have since been approved, and even more are in the pipeline for discussion, the impact is not likely to be felt within the year, which may dampen buyer sentiment.
Nonetheless, there are initiatives that are looking to bring Darwin back to growth in the long run. The CBD revitalisation project is in progress and includes the establishment of a new campus of Charles Darwin University. With an investment of $200m, the completion of this project is expected to pay for itself by contributing to a livelier city, stronger population growth and a steadier economy. Darwin investors just have to be willing to wait it out.
SUBURB TO WATCH
FANNIE BAY:
After a difficult period of downturn, the suburb of Fannie Bay is reporting positivity across the board.
Both house and unit values were up in the 12 months to February 2020. While units increased by 4.7%, they remain quite reasonably priced at a median of under $400,000. Rental returns were strong, averaging 5.9%, and while rental rates fell, this was only by 1.3% to a weekly average of $395.
Fannie Bay is close to Lake Alexander and is also the home of the Fannie Bay Gaol Museum. This small suburb’s population is made up primarily of young professionals aged between 20 and 39.
Growth: Both house and unit prices saw an increase in the year to February 2020
Yield: Rental yields fromunits are high, at a median of 5.9%
