|
The month in review: Darwin
By Herron Todd White
July, 2009
The residential market in Darwin has changed considerably
over the past 12 months since we last reported on what a
lazy half a million could purchase.
Darwin experienced a topsy-turvy year in 2008. The
beginning of the year saw rapidly rising interest rates
leading to an affordability issue in all market segments,
together with the onset of the global financial crisis, which
dampened purchaser’s sentiment. Then in September,
INPEX Browse announced that they would spend
$12 billion on building a gas plant in Darwin Harbour
connected to the Ichthys Gas field via an underwater
pipeline. This led to a flurry of interest in the residential market and properties started to “fly out the door”. This
was accelerated by falling interest rates in the second half
of the year, high property yields of 5.5-6.5%, and later,
generous first homeowner grants and building grants by
the Federal and Territory Governments.
First homeowners, investors and builders then flooded
the market searching for land, first homes and investment
properties. The problem being, that there was very little
on the supply side available for these people to purchase.
This has seen values rise a staggering amount in the past
9 months. In particular, land values have surged the most
due to a chronic shortage of land available. This has come
about from poor planning policy from the public sector.
A typical block of land in Palmerston could be purchased
for around $160,000 - $180,000 twelve months ago. But
today, the same parcel of land will set a purchaser back
$220,000-$240,000 or an extra $60,000.
The Government’s response to this chronic shortage of
land, has been to start releasing land and planning for
future demand. There are currently two new suburbs
planned for Palmerston, including Bellamack and
Johnston, with land due for release at the end of the year/
early next year. There are also a number of other nearby
areas earmarked for suburbs, which should be released in
the very near future.
In June 2008, we reported that $500,000 may secure the
following in the greater Darwin residential market:
• An average 3 bedroom, 2 bathroom, rural
dwelling on 2Ha with pool and/or shed in the inner rural
locales
• A near new 4 bedroom, 2 bathroom, ground
level dwelling in the newer suburbs of Palmerston
• A near new 3 bedroom, inner Darwin CBD
apartment with district and possible sea views
• Or a 550 to 650m2 vacant parcel of land within
the residential infill subdivision of “Frances Park” in the
inner CBD location of Stuart Park which is currently under
construction.
Now, after the huge surge in demand and rise in values,
$500,000 will buy the following in comparison:
• A basic 3 bedroom, 2 bathroom, inner rural
dwelling on 2Ha, or, a good 3 bedroom, 2 bathroom,
outer rural dwelling with pool and/or shed in Darwin’s
northern suburbs
• A near new 3 bedroom, 2 bathroom, ground
level dwelling in the newer suburbs of Palmerston, or an
older style 4 bedroom, 2 bathroom with pool and shed in
the older suburbs.
• A near new 2-3 bedroom, inner Darwin CBD
apartment with district and basic sea views.
The old property saying “timing the market” seems to ring
true when we look back on the market over the past 12
months. The growth in values is expected to continue in
the short term, however there are some factors that may
dampen the demand for property towards the end of this
year and early next year.
First of all is the cessation of the Federal First Home
Owners’ Grant Boost and the NT Government’s BuildStart
grant at 31st December. This may reduce the number of
first home buyers and home builders in the market.
Second of all is the release of land in Bellamack and
Johnston at the end of the year and early next year. If too
much land is released, or the price is too high, then home
builders my shy away from building.
And third of all is the possibility that interest rates may
start rising early next year. This could lead to properties
becoming unaffordable due to loan serviceability
problems.
But no one can argue that the economic future for
Darwin is not bright, with major gas projects planned.
This will help stimulate population growth, investment
and employment in the Territory for years to come.
|
