By Herron Todd White
The start of 2020 promised a continuation of the moribund market conditions which all Darwin property markets had experienced over the past five years. However, by the end of the year there was an unexpected but significant spike in demand and market activity, leading to price growth in a number of residential market segments.
Most of the change in sentiment has been driven by Government’s response to the pandemic.
In the residential sphere, this is most evident in the introduction of generous incentives, especially for first home builders who could be entitled to up to $55,000 in various programs to encourage them to commence building, with all the economic multiplier benefits that it generates.
As a result, we have seen all 22 blocks in Northcrest stages 3A-3C being snapped up by prospective home builders and a similar situation exists in Zuccoli. This level of demand would have been unthinkable 12 months ago when estate developers were deliberating on whether to hold off on more land releases: now there is a scramble to get land developed as soon as possible.
The NT Government recently announced that it would extend its BuildBonus program until the end of March 2021, Building contracts signed for three months after 1 January 2021 will be eligible for a $12,000 grant. Whilst this is down from the $20,000 which was available in 2020, it is still a generous incentive to encourage building works. Of course, the improvement in market conditions which has developed in the past two months has not been spread evenly across the board. There is still an oversupply of residential units in the CBD and inner suburbs and this market segment has not improved to the same extent as some others.
Also, demand is most evident in the sub-$650,000 price brackets.
There has also been a decrease in vacancy rates across Greater Darwin. The fact that the NT (so far) has avoided the worst ravages of the pandemic and has mainly avoided lockdowns has seen a population influx from southern states.
Whilst the improvements in residential market conditions have been very welcome, we have some concerns about how sustainable they will be through 2021. The economic fundamentals in Darwin have not changed in the past 12 months, and if employment prospects do not improve, we will see many new Territorians drift back down south in search of work. However, in a financial environment of historically low interest rates and a physical environment offering the best lifestyle of any Australian capital city, why wouldn’t many of them choose to stay?
Speak with a Darwin Mortgage Broker today.