Darwin April 2017

The month in review: Darwin

By Herron Todd White
April 2017

Darwin’s property market has experienced a steady increase in buyer activity in recent months with first home buyers leading the revival. The re-introduction of the first home owner grant (FHOG) in October 2016 across all property types has had a significant effect on the market. The grant is divided between new and established properties, with a $26,000 grant for purchasing or building a new home and up to $23,928.60 stamp duty discount for the purchase of an established home valued at up to $650,000. As a result, both grants have stimulated activity in particular areas of the market especially those suburbs dominated by sub-$650,000 median price dwellings and the developing suburbs of Muirhead, Durack Heights and Zuccoli.

For the first time in many years, the once dormant first home buyers have outnumbered investors to become the main drivers of activity in the housing market in Darwin.

Units in the inner fringe suburbs of Stuart Park, Larrakeyah and Parap used to be dominated by investors. Prior to the downturn of the market a few years ago, most of the units were occupied by renters, mainly single professionals or young couples who could only afford to rent as the high property prices had elbowed them out. When the market softened in late 2015, these areas were one of the hardest hit with an average decline of 20% in capital values, especially for properties bought off the plan at the peak of the market. However, market conditions have changed and now these areas have become the new hot spots for first home buyers. In terms of price point, the demand appears to gear towards 3-bedroom units in the price range of $350,000 to $450,000, and $250,000 to $400,000 for 2-bedroom units. The lower end of the range mainly consists of older units of a lesser standard and lacking amenities such as undercover car parks, intercom systems and passenger lifts. Units in other areas such as Nightcliff, Coconut Grove, Millner and Rapid Creek in the northern suburbs have also experienced an increased level of buyer activity in recent months. A large amount of the transactions occurred in the $250,000 to $400,000 bracket for a 2-bedroom unit, and $350,000 to $500,000 for a 3-bedroom unit. The lower bracket is predominantly older-style units built in the 1980s whilst the upper end is mostly concentrated along the Nightcliff foreshore.

For existing residential houses, demand has shifted towards areas dominated by sub-$650,000 median price properties. The northern suburbs of Jingili, Wulagi, Anula and Leanyer have become the latest hunting ground for first home buyers since the re-introduction of the FHOG for existing properties. Even more surprisingly, the less sought-after suburbs of Malak and Karama, which are dominated by ex-housing commission houses, have also experienced a surge in sales in recent months. In terms of price point, demand appears to gear towards the 3-bedroom, 1-bathroom, ground-level dwellings in the $400,000 to $500,000 price range. Most of these properties have fairly basic improvements and require some degree of renovation.

In addition to northern suburbs, existing residential houses in Palmerston have also experienced a spike in sales volume particularly in the suburbs of Gunn, Durack, Moulden and Woodroffe. Gunn and Durack are more popular among first home buyers due to their proximity to amenities in the Palmerston CBD with the majority of the transactions occurring in the price range of $400,000 to $500,000 for ground-level, 3-bedroom, 2-bathroom dwellings. These properties were mostly built in the late 1990s and many are DHA stock that is being placed back in the hands of the owners in their original condition following lease expiry. Land sizes range from 400 to 600 square metres. In addition, Moulden and Woodroffe which were among the first suburbs to be built in Palmerston in the 1980s, have also attracted first home buyers’ interest with a large volume of transactions occurring in the range of $300,000 to $400,000. In contrast, existing properties in the relatively modern suburbs of Bellamack and Johnston are experiencing lacklustre buying activity due to the large release of vacant land in the developing suburbs of Durack Heights and Zuccoli. First home buyers have the option to purchase a house and land package in these areas at a relatively cheaper price, and this can be as low as $400,000 for entry-level homes in Zuccoli and $500,000 in Durack Heights.

The Northern Territory Government plays a significant role in local economic development. The re-introduction of the FHOG for existing properties in October 2016 is certainly a welcome move for first home buyers. Housing affordability has been an issue plaguing the Top End for a long time. Therefore, it is vital that housing affordability is at the forefront of government policy plans to secure a long-term future for the Northern Territory, and be seen as an affordable place to live.

 

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