The month in review: Darwin
By Herron Todd White
July, 2010
After years of solid growth and strong rental returns in
the majority of Darwin’s residential property market,
it appears as though things are slowing down and the
market may have reached its peak. Overall the market
is likely to plateau for the short term until the next large
infrastructure project commences (most likely to be the
much anticipated Inpex Gas Project).
Where would one spend $500,000 if given the chance?
Unfortunately there are few options available to purchase
property in this price bracket with the majority of the value
of properties exceeding this price. However it is not all
grim and with some careful research, some opportunities
still do exist. As for rental returns verses potential capital
growth, this article aims at identifying the types of
properties that should remain popular with tenants and
owner occupiers alike in the long term and therefore this
stock should provide a solid long term investment.
There is currently an emerging over supply of newly built
prestige three-bedroom units both for sale and available
to rent in the Darwin CBD. This oversupply may eventually
result in softening of sale prices and achievable rents in
this sector of the market which could have a flow on affect.
On a positive note however, Darwin has a very young and
transient population, many of whom like to live close to
the CBD both for ease of getting to work and proximity
to the nightlife. As such the lower end of the unit market
in the CBD is likely to remain popular. For example, there
is currently a two-bedroom, two-bathroom unit for
sale towards the end of Mitchell Street (entertainment
precinct) for approximately $490,000 with a rental return
indicating around 6.5% yield (at current asking price).
Although this yield appears higher than the average twobedroom
unit (generally 5.5%-6.0%), this type of product
offers much better future growth potential as opposed to
the three-bedroom unit market.
City fringe suburbs such as Larrakeyah, Stuart Park, Parap
and Woolner are all within 5km of the CBD and each offer
unique lifestyle qualities such as proximity to the Parap
Markets in the case of Parap or views of the Gardens Golf
Course, in the case of several Larrakeyah properties. The
proximity to the CBD as well as the unique suburb features
will ensures these suburbs remain popular into the future.
As with the case of CBD units, the more affordable sector
of the market offers the best potential for future growth.
The sea-fringing northern suburb locales of Nightcliff
and Rapid Creek have always been popular with renters
and owner occupiers alike. Within walking distance to the
Hospital and University, the scenic Nightcliff foreshore
encourages exercise and the Beachfront Hotel ensures
those who get thirsty can unwind with a drink. There
remain many older style one and two-bedroom units
with good sea views for sale along the foreshore. As with
most places within Australia, these views should ensure
capital growth will continue into the future. A final suburb
worth mentioning to buy units in is Millner. With future
expansion of the Homemaker Centre planned, as well
as the planned development of the airport bulky goods
centre, Millner’s popularity is likely to increase.
Townhouses and semi detached ground level units
are another type of property worth considering. These
appeal to a broad sector of the market including renters,
first home buyers and those wishing to downsize. Some
are within pet-friendly complexes (increasing appeal)
and often come with relatively good sized yards and
sometimes even feature a spa or plunge pool. Areas such
as The Gardens, Fannie Bay, Brinkin, Tiwi and Leanyer are
all well sought after for this type of property as they each
offer a unique lifestyle appeal. With limited land available
for further expansion in Darwin and the northern suburbs,
this type of dwelling offers the next best alternative to
living in a house. The broad type of purchaser that these
dwellings appeal to should ensure demand will remain
strong into the future.
The final type of property worth considering is a house in
the northern suburbs. For this price one could only buy
an original basic dwelling. However if the dwelling has
good structural bones, and a floor plan that would enable
relatively easy extensions and renovations, good capital
growth should be enjoyed upon completion of the works.
As previously mentioned, the lack of land available to
be released has ensured many pockets of the northern
suburbs are growing in popularity and this trend is likely
to continue into the foreseeable future.
Overall, growth is likely to be minimal in the short term,
however, with a growing population and limited land
available for release, the more affordable property types
should enjoy capital growth once the economy enters its
next boom phase.
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