By Herron Todd White
Darwin has experienced a few tough years and the weakening trend continued into 2019. The peak of the market (2013-2014) which was mainly inflated by the Ichthys gas project was going to end at some point and we are now experiencing the aftermath.
Since the start of the year, we have seen declines in both sales and median price for all suburbs across Darwin (REINT). All markets have been hit, from residential to commercial, dwellings to units and the suburbs of Parap to Darwin River. The weak market has been foreseen for some time now and it is now believed that homeowners are coming to the realisation that their homes are not worth what they perceive. This has been a difficult process and caused stress throughout the market and wider economy.
We have seen some big reductions, especially in the Darwin CBD. There has been a 40% fall in the median unit and townhouse price from $565,500 in March 2015 to $330,000 in March 2019 (REINT). Also looking Palmerston way, the suburb Moulden has experienced some big reductions; recent analysed sales of dwellings show a drop in the order of 30% or more from 2013/2014.
Be that as it may, we should not be discouraged by the current state of the market. Unfortunately, it is a reality that we are seeing some heavy reductions
but to put things into perspective, we need to take a look at Australia as a whole.
According to the Australian Bureau of Statistics (ABS), the latest release shows new lending for investment dwelling in Australia is at its lowest since 2011. Additionally, lending for purchase or construction of a new home in Australia has fallen to its lowest level since 2013. Lending to households has decreased year on year by 17.8% in the Northern Territory (ABS). This is a heavy drop but again, we need to look at it comparatively to other states. Victoria and New South Wales have also both dropped year on year, 15.4% and 18.9% respectively. There has been a downturn in all states with the only exception being Tasmania.
We are not alone up here. The silver lining is that we are now in a period of market affordability; the dream of owning a home or unit is now realistic for Territorians.
As mentioned earlier, we are seeing homeowners slowly accepting the very weak property market. This is reinforced by looking at the recent statistics for the northern suburbs. Although sales are decreasing, we are seeing prices stabilising to only minimal decreases (REINT, March 2019). It is only our opinion and we can only speculate that it means people will only sell if it is their last option, if not, they are holding onto their properties for a better market and thus price. The rental market has steadied in recent times and popular locations are still easily rented.
We need to remember during these tough times the old saying “you only lose if you sell”. However, if you must sell, we are seeing well-presented properties still high in demand, so be sure to present your home in good condition, have neat and tidy landscaping and make sure there are no small works required by the potential buyer.
Since the start of 2019, there have been plenty of things done to pave the way to a more positive market. The government has introduced new inventive schemes (Territory Home Owner Bonus) and construction of new buildings in Darwin (new four-level below ground car Park) and Palmerston (police station). We also note the interstate relocation schemes (Welcome to the Territory incentives) introduced in August 2018 will also make a positive impact in 2019.
To end things off, we have seen land prices increase
in the Palmerston suburb of Zuccoli (specifically the Aspire development). This increase came as a surprise to us but it is showing that the supply of land is not meeting demand and ultimately this can be seen as evidence that the government incentive program is playing its role. There is a lot happening to kick start the economy and our office remains positive that there will be a brighter market; it will just take time for the government schemes to take full effect.
Speak with a Darwin Mortgage Broker today.