By Herron Todd White
The Northern Territory has remained one of the safest places throughout the COVID pandemic; limited numbers of cases and closed borders have retained our tropical way of life. Now that the health issues appear to be behind us (fingers crossed) we are looking to the economic recovery that will offer prosperity.
The residential property market has been a long-term driver of the economy, with significant economic spin from the money placed into the economy via the construction industry.
As at September 2020, the Northern Territory government was offering one of the most lucrative incentive packages for new residential construction. The plan is to kick start the economy and increase the numbers of permanent Territorians, not just transient residents.
Currently on offer is a $20,000 build bonus scheme if buying or building a new home. This was first offered in February 2019 because, at that point, the market was fairly weak and the uptake for new homes was slow.
Since then, the market has certainly picked up and the addition of the federal government’s construction bonus of $25,000 had added impetus to this market. A further first homeowner grant (from the Northern Territory government) of $10,000 is available on new homes. 600 of these grants have been released and it’s understood that up to 500 of these have been issued.
Further to the cash incentive is a reduction in stamp duty discount called the Territory Home Owner Discount. It’s an up to $18,601 stamp duty concession for people buying or building a new or established home that they will live in and who haven’t owned a home in the Northern Territory for at least 24 months. This includes:
- First home buyers;
- People moving from interstate;
- Former Territorians returning to live in the Territory;
- Territorians who are currently renting, but used to own a home; and
- Recent divorcees (the 24-month requirement is waived).
Finally, there is a $10,000 home renovation grant if buying a first home which is an existing dwelling.
Where are the buyers going? We have three distinct subdivisions in the greater Darwin market and one main location in Alice Springs. Not surprisingly these are driven by price point. The Darwin locations are:
- Zuccoli, located to the east of Palmerston. The price point here is in the range of $400,000 to $600,000 for house and land packages;
- Northcrest, a central Darwin location. The price point here is between $600,000 and $750,000; and
- Muirhead, a northern suburbs location with a price point between $600,000 and $850,000.
In Alice Springs, Kilgariff is the main offering, located on the southern side of the city between the airport and town, with a price point between $500,000 and $700,000.
With the addition of the extra federal government incentive of $25,000 (which expires in December 2020), there has been heightened activity in these subdivisions.
The issue facing the market now is the availability of titled land for which a land contract and building contract can be executed. We are seeing in the marketplace that there’s a premium attached to the brand new product compared to second hand, due to the incentives (up to $60,000 in the Northern Territory) which are applied for First Home Owners
Given we had fairly weak conditions up until July 2020 in the dwelling market, land developers had been less inclined to create significant new supply beyond demand and now with the wet season upon us, it would seem that supply will remain slow until mid 2021. An extension of the federal government incentive to mid 2021 would be very well received by the marketplace of course.
Are values stacking up? Dwellings built to their location’s price demographic are holding firm, however we note that some issues still arise in the marketplace with over-capitalisation in particular locations.
The wider residential market has really started to turn in the Northern Territory. Anecdotal evidence indicates that auctions and sales campaigns are very strong, rental vacancy rates are dropping and a positive market sentiment is being felt across town. The positive activity in the existing market and government incentives on house and land packages will drive our market right up to Christmas.
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.