The month in review: Darwin
By Herron Todd White
December, 2009
As we look back on the year that was, we revisit our
predictions of February 2009 to find our accuracy to
be spot on. The local residential market sectors have,
largely, continued in a positive direction underpinned by
underlying key market drivers we had highlighted:
• Tight rental market continues to prevail although yields
have softened slightly. This result has surprised us as we
were not predicting capital growth to outstrip rental
growth, given the strong preceding years of rental
growth and the general world economic climate.
• The ‘perfect storm’ of historically low interest rates and
government incentives for 1st home buyers resulted in
strong buyer demand for property in the sub $400,000
market segment. While affordability gains were initially
made with the low interest rate environment, this was
somewhat short lived, with resulting increasing capital
values taking back initial affordability gains. To that end,
if there is a market segment which may be considered
as a losing property sector, then it is has been the sub
$400,000 submarket. This submarket now generally
offers limited supply and is restricted to the purchase
of older style units and houses.
• The new suburb of Lyons in Darwin’s northern suburbs
has been a surprising development. Our analysis of
all transactions (exclusive of all Defence Housing
purchases completed on a yield basis) occurring
throughout 2009 indicates that the average purchase
price is approximately $850,000. While the number of
transactions currently remains limited, the context of
this average sale price should be viewed against that
of Darwin’s average house price, which currently is
hovering around the low $500,000’s, and the general
world economic climate.
• Prestige or executive residential apartments
($800,000+) were considered by our office as a
submarket we expected to be most exposed to
effects of the general world economic climate. In a
year, with several large apartment complexes heavily
weighted with $1M+ apartments due for completion
there has been only, at best, anecdotal evidence and
the odd market transaction considered as indicating
a softening of this market segment. While there has
certainly been a reduction in the number of market
transaction volumes within this market segment, our
prediction that the local developers have the ability
to retain stock and simply not liquidate or flood the
market has rung true. With the Australian and world
economic conditions continuing to improve, the ability of these local developers to hold stock and wait for
a return to more favourable conditions may be what
sets our residential market apart to those of interstate
locations.
Overall, our predictions of limited economic fallout
affecting the residential market appear to have been
correct. With the highest average rents in any capital city,
the prospect of multibillion dollar gas projects to begin
in 2010/11 Darwin does indeed have appeared to have
weathered the global economic storm.
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