The month in review: Darwin
By Herron Todd White
October, 2009
The question we have to ask in Darwin lately has been
not so much “which suburb is a dud”? as much as “which
suburb has been the least hot”?
In a city of Darwin’s size of about 120,000 (including
the rural area), it is more appropriate to look at market
segments rather than trying to classify suburbs. It’s
actually one of the attractions of Darwin that enclaves
of rich and poor suburbs are not as clearly developed
as in many other cities. There are still some very modest
dwellings in the supposedly upper crust suburbs of
Fannie Bay and Larrakeyah.
Anything in the vaguely affordable price bracket (ie
under say $550,000) has definitely not been a dud over
the past 12 months. The First Home Owners’ Boost and
the NT Government’s BuildStart Scheme have sparked
strong demand for this type of property, leading to very
good capital growth.
The more expensive price brackets have definitely seen
less interest over the past 6 months. Whilst calling them
dud investments would be far too cruel, it is true that
the market activity for CBD residential units over say
$800,000 has softened and the outlook remains soft for
the next 12 months. There is also a definite preference
for smaller complexes by many buyers, so townhouses
even at this value level still attract good interest, but in
larger complexes, units down to $600,000 can be harder
to sell. People who can afford such property, either as
owner-occupiers or investors, are still remaining cautious
about buying, especially considering the risk of interest
rate rises, which would hurt even more at this value level.
Also there may be a ripple effect from the anticipated
reduction in demand for cheaper property once the
Government assistance schemes cease.
Our other main area of concern is vacant land in
Palmerston suburbs. This land has continued to grow in
value over the past 12 months, simply due to lack of supply.
However the NT Government has announced a program
of release of over 3,700 blocks in new Palmerston suburbs
over the next 5 years (plus 1300 blocks at Berrimah and a
new city of 10,000 lots at Weddell after 2014). So blocks
in the new suburb of Bellamack are being sold for around
$180,000 (albeit not yet developed), while existing blocks
of identical size in Rosebery just the other side of Owston
Avenue, are commanding $240,000. Bellamack is being
trickled onto the market at the moment but if these
land releases are not carefully managed they may have a
detrimental effect on the value of existing stock. We also
note that often times it is difficult for the sale of a new
house in Palmerston to recover the cost of construction
plus the land.
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