The month in review: Darwin
By Herron Todd White
June, 2010
The question ‘who are the buyers’ within our residential
markets continues, largely to be governed by a number
of government policies dealing with but not exclusively:
• En globo land releases.
• Affordable housing initiatives.
• Tax cuts and concessions to support home ownership
as announced within the 2010 NT Budget.
To understand, who are the buyers and how they are
affected by current government policies, and other
factors affecting demand and supply (including interest
rates and the cost of building construction) within our
various residential sub markets it must be understood
what state our market is currently in.
With broad brushstrokes, some points about Darwin,
Palmerston and Darwin rural locations:
• Sales transactions across all sub markets have
decreased, some by up to 40%.
• Despite decreased market transactions, all residential
sub markets experienced capital growth between 8%
and 25%.
• Rental vacancy rates have softened slightly but remain
under 2.5%, whilst yields have slightly tightened.
• Limited vacant land availability underpins steady
capital growth across each of our major residential
locations.
Given the above, buyers we see as active within our
markets include:
• First and second home-buyers purchasing vacant
land within new land releases of Bellamack. Already
some 200 lots have been sold with a total of 678 lots
to be released. These buyers have been buoyed by
recent government initiatives that address stamp duty
concessions and purchase price caps for Homestart
NT. Beyond this initial land release will then be the
suburbs of Johnston and Zuccoli. These further land
releases will include medium density developments,
which are currently undergoing tendering by the NT
Government. Overarching this will be the inclusion of
15% of future land releases for affordable housing.
• Another buyer segment active within the market
includes those purchasing established apartments
within Palmerston, which are priced between $350,000
and $500,000. To date in 2010, we note, that within
this sub market, approximately 75% of all apartment
sales are occurring within this price bracket. No doubt
we will see continuing strong demand levels due to
the adjustment of the Homestart NT price cap (from $420,000 to $475,000) and stamp duty concessions
introduced in the recent 2010 NT Budget.
• Developers within the Darwin CBD have recently had ‘the dust settle’ with regards to planning laws governing
building setbacks and volumetric controls. With limited
vacant land parcels on offer, our office has noticed
increased activity by developers to now (a) attempt
to land bank potential development sites (b) resubmit
DAs to address new planning requirements or on sell
the site, or (c) are resubmitting DAs for developments
which previously had a heavy weighting of threebedroom
apartments. In doing so we see developers
addressing the current oversupply of executive style
apartments or apartments priced above $700,000
within the CBD and surrounding inner Darwin suburbs.
Such reconfigured larger developments we are aware
of include ‘Wharf 2’ at the Darwin Waterfront which has
seen strong buyer demand for one and two-bedroom
stock released to market to date; and ‘The Avenue’ which has approximately 10% of its 139 apartments
within its mixed commercial/residential development
configured as three-bedroom apartments. Although
the developers in this case, after conducting market
research, went to market with this configuration. This
resulted in strong buyer demand for the one and
two-bedroom stock, especially within the $300,000 to
$600,000 price bracket.
And as we indicated two years ago, the burgeoning gas
exploration occurring within the seas off the NT and WA
will continue to be one of the main drivers of the NT
economy. The potential $12 billion INPEX LNG investment
decision was recently delayed until 2011, which has
caused concerns to some prospective purchasers. Whilst
the NT economy remains strong, buoyed by continuing
strong retail trade turnover and employment growth, and
underpinned by positive population growth, the INPEX
investment announcement does appears to be creating a
holding pattern for local investment. In light of this there
will be buyers in the market looking for the opportunities
that result when sellers are unsure of future macro market
directions.
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