By Herron Todd White
The Northern Territory is the safest location in the country, being the first state or territory to clinically eradicate COVID-19 and all confirmed cases having now recovered (Health Minister, Natasha Fyles) and no new notifications for some time now. The borders have been locked down and travel into remote communities has been limited. These strong actions, the small population base and the adherence to the recommendations should position the Northern Territory to respond well in our economic recovery.
How has this transitioned to the property sector?
Whilst restrictions have now been eased and borders are set to reopen on 20 July, at the height of the crisis, leading local sales agents were reporting a stable level of interest for stock already on the market and open homes were replaced by private appointments – one agent noting that this had led to more qualified buyers coming through and less tyre kickers. Real Estate Central has shifted to online auctions using the Gavel app, resulting in a handful of sold dwellings. The private treaty sales campaigns have been successful with reigning REINT agent of the year Derek Hart of Elders Real Estate reporting strong activity with private treaty campaigns (source: NT News).
When considering the pipeline coming forward, it has been noted that appraisals are significantly down and the current activity is from pre-COVID-19 stock. Vendors requiring a result are still motivated towards sale, however for many the COVID-19 interruption has postponed planning to later in 2020 with a more cautious wait and see outlook.
With this activity we have not seen any market reductions that are out of line or increased market reductions as a result of the COVID-19 pandemic, noting that some market sectors have been performing quite poorly due to the wider market forces.
Whilst job losses have hit much of the nation heavily, the Northern Territory is fortunately positioned due to a number of factors: we have over 21,500 public servants (source: The Office of the Commissioner for Public Employment), all of whom are still being fully paid and therefore have the ability to support their families. A further 5,500 are defence personnel (source: Department of Treasury and Finance). This equates to over ten per cent of the total population maintaining full employment.
In a positive for the market, long term residential tenancies have remained relatively firm. The larger agencies have indicated that requests for rent reduction remain quite low and rental arrears have not spiked. The short term tenancy market is very poor. Holiday makers have evaporated from the local scene and a number of short stay companies have noted that their forward bookings are very poor and that the 2020 dry season will be a difficult period.
The government stimulus programs have been quite generous; approximately $100 million has been allocated to the Home Improvement Scheme, whereby the government will offer $4,000 with an owner contribution of $1,000 or $6,000 with an owner contribution of $2,000. This will help owners improve their properties, which may increase the value of their assets as we move past the COVID-19 slowdown. Recent federal government announcements about the Home Builder package (which sees eligible home owners pocket $25,000 on a $150,000 spend), coupled with existing Northern Territory government packages provides a total benefit of up to $45,000. The impact so far is difficult to judge, however anecdotally some builders have seen a significant increase in enquiry.
So with that all said, where is the Northern Territory market? We are yet to see any firm market evidence that the COVID-19 pandemic has resulted in lower rents or capital values. The big test as we look through the forward lens is the speed at which the economy can recover following the easing of restrictions and border openings. As Victoria battles a surge in cases, the threat of an infection in the Territory remains very real and a second wave of infection would see confidence and market sentiment evaporate.
The main theme for this month’s review focuses on a price point of $700,000 and which property types can be accessed at this level. The answer here in the Top End is – most.
From a three-bedroom unit in the CBD with harbour views, to a four-bedroom, two-bathroom modern dwelling in the developing residential area of Muirhead, to a rural lifestyle property down the track with a shed with all the trimmings in Humpty Doo – this price point delivers some wide and varied property types. This has not always been the case and the extent of the growth experienced in the market between 2012 and 2015 and the subsequent cliff it has driven off since is well known.
Naturally, buyers cashed up and bringing a budget of $700,000 to the table are likely to see value for money especially compared to a number of years back. It seemingly presents as an opportunistic time to purchase across many property types. It’s not only the safest place in Australia to live during a pandemic, but economically viable – how much worse can our economy get?
Surely there is only upside in the Northern Territory – it’s a safe bet.
Speak with a Darwin Mortgage Broker today.
DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.