By Herron Todd White
There are fundamental factors one must address when purchasing a property, including location, configuration, construction type, size and proximity to local amenities.
The Northern Territory residential market is no different. Arguably in its weakest state for years, there is ample opportunity in all aspects of the Darwin residential market. With the population outflow following the wind-down of several mining projects still continuing, the Northern Territory is approaching what could be considered towards the bottom, however, there are some signs of gradual improvement in the form of house prices largely stabilising and an increase in the number of approvals.
Rental yields are as strong as ever coupled with interest rates at a historical low of 1.25 per cent. Darwin property remains attractive for investors and home buyers alike.
Looking specifically at the Darwin CBD and innercity suburbs, units are currently at some of the lowest prices seen in the past 15 years. This type of property would greatly appeal to first home buyers looking to first enter the market and wishing to be close to the city.
An entry-level option available starts at approximately $150,000 for a dated one-bedroom studio apartment located in the CBD. At a slightly higher price point, two-bedroom, one-bathroom units can start from $250,000. These units are generally the primary configuration for apartment-style accommodation and provide adequate living space for small families, couples and singles. This area is well serviced by schools, shopping facilities, restaurant amenities and within close proximity of major social events. For prestige or higher-end buyers in this segment, a modern three-bedroom unit can be purchased for $550,000, ranging up to $1 million for a penthouse apartment in the highly sought after location of the Esplanade. This luxury level segment of the market is characterised by expansive ocean views over Darwin Harbour and all the amenities of the Darwin CBD.
Moving towards the suburbs on the fringe of the CBD, semi-detached units such as townhouses are far more common. This type of property offers the benefit of a small yard and land on title for families that require extra space for growth. Suburbs such as Parap and Stuart Park have entry-level semidetached units beginning at $330,000. Dwellings with large residential allotments between 800 and 1,300 square metres are also available. Entry-level dwellings in this segment can be purchased from as low as $450,000 in Ludmilla to approximately $600,000 in the more popular Stuart Park. These types of properties are generally dated, three-bedroom configurations and constructed circa 1970s and 1980s, offering opportunities for those looking to renovate whilst staying within close proximity of the city. The highest-end section of the Darwin market is evident here, with oceanside suburbs such as Fannie Bay, Larrakeyah and Bayview. A pre-Cyclone Tracy dwelling of standard three to four-bedroom, one-bathroom configuration begins at approximately $600,000 in Fannie Bay. On the other end of the spectrum, house prices can reach up to $1.6 million in the same suburb. These prestige dwellings are erected on large allotment sizes and are fully renovated or built to a high quality. Cullen Bay, Larrakeyah’s prestige segment on the marina, also comprises similar quality dwellings in a comparable price range. This location is serviced by several restaurants in the Marina and enjoys ocean views and direct marina access.
Within a short driving distance of the Darwin CBD, Cullen Bay offers many features which secure its spot in the prestige section of the Darwin market.
The next suburb segment, the northern suburbs, comprises the majority of the Darwin residential properties. First looking at units, the north coastal section contains the majority of apartment-style living. Suburbs such as Coconut Grove, Nightcliff and Rapid Creek are all within close proximity of the ocean, a key factor when purchasing a unit in this locality. Higher values are attributed to those with views over the Foreshore. An attached two-bedroom unit in this area can be purchased from approximately $350,000, depending on its views and proximity to the water. This part of the market is experiencing a sustained drop in both sales volumes and prices, with a substantial oversupply and lack of demand. Rental yields remain high at approximately 6.6%, however, this reflects the higher risk associated with the market and an elevated vacancy level. Again, this is a reflection of the overall soft conditions of the market and the general population decline in Darwin. We expect this sector to lag behind the detached housing market in terms of stabilising and see some tough times still ahead in 2019. For dwellings, a standard ex-government housing three-bedroom dwelling can be purchased from $590,000. These dwellings come in ground level and elevated construction types and at this price point, are quite dated. This area is well serviced by schools, shopping and local sporting facilities such as the Marrara sporting complex.
Further inland, the bulk of the northern suburbs is made up of standard three-bedroom one-bathroom dwellings constructed in the 1980s. Allotment sizes are of an adequate 800 square metres, with the exception of the newer suburbs Lyons and Muirhead. The price point for an average detached house in this segment is $450,000. At this price, the dwelling would generally be ground level, partly updated and likely to have a pool or spa. An entry-level semi-detached two-bedroom unit can be purchased for approximately $200,000 in the suburb of Karama. The northern suburbs have a significant amount of services available such as sporting facilities, schools, the Casuarina shopping precinct and the Royal Darwin Hospital which makes this area ideal for young families or first home buyers looking to enter the housing market.
Palmerston City is the last locality on our agenda, located 21 kilometres from Darwin comprising 18 suburbs. Recently known as the fastest growing city in Australia, Palmerston offers substantially more affordable housing options for those willing to live away from the ocean. An entry-level, two-bedroom unit can be purchased for $175,000 in Woodroffe, while a three-bedroom dwelling of similar calibre in Moulden can be obtained for $240,000. At the prestige end of the market, the suburbs of Farrar, Durack and Zuccoli offer the best choice. For approximately $750,000, a modern four-to-five bedroom property on the Palmerston Golf Course can be purchased in Durack. This area is serviced by the newly built Gateway Shopping Precinct, schools and parklands and is within a short drive of downtown Palmerston.
When regarding fundamentals of a home, location, configuration and quality are all important factors at the right price point. However, knowing the vendor is another key factor in terms of reaching a successful sale. In this current softened market, potential purchasers are in an excellent position to take advantage of the excess supply across all segments of the market. With vendors now acknowledging the new lower price points, an increase of transactions can be expected, however, we expect this weak state to continue in the short and medium term.
Speak with a Darwin Mortgage Broker today.