Darwin July 2018

The month in review: Darwin

By Herron Todd White
July 2018

Finding a property worth a lazy $500,000 is becoming increasingly easier in Darwin, as a result of continued weakening market trends for almost four years now. Across almost all areas of the Territory residential market, both median prices and sales volumes have repeatedly shown softening market conditions, with strong evidence we have almost reached the bottom of the market. Whilst these figures are obviously quite undesirable for vendors and home owners looking to refinance, potential first home owners are in an excellent position to enter into the market. Investors can also take advantage of weak market conditions as well, with rental yields still remaining some of the best in the country.

Overall, the Darwin median price for an average dwelling currently sits at $505,000. This is split into the four main sectors of Northern Suburbs, Darwin Inner Suburbs, Palmerston and Rural. Traditionally, one of the most popular sections of the market in terms of sales volumes, the Northern Suburbs region currently provides ample opportunity in the half million range. At this price point, a well fitted out ground level 3- bedroom, one bathroom dwelling could be purchased with ancillary improvements, such as a pool and shed. This type of property can be found in suburbs such as Wagaman, Tiwi, Moil, Anula and Wulagi. Generally, they are of rendered masonry or double brick type of construction with an updated level of appointment. Renovated ex-government dwellings are a large portion of this stock, with many built solid enough to weather 1974’s devastating Cyclone Tracy. Looking to the slightly more affordable suburbs of Malak and Karama, at this price point a large 4- bedroom renovated home or a double storey dwelling could be purchased. We draw attention to the recent sale of 29 Bauer Crescent, Karama, a two storey, 4- bedroom, well maintained dwelling with a pool and shed for $516,000. This lower segment of the market would be perfect for first home buyers entering the market, with those able to take advantage of both the First Home Owner’s Grant in the form of stamp duty concessions and The Home Renovation Grant, providing $10,000. For those savvy investors, the rental yields remain strong sitting at approximately 5.2%, which is substantially higher than other capital cities.

Looking towards the Coastal sector of the Northern Suburbs, the lazy half a million is slightly more restricted in purchasing power, however, opportunities are becoming evident with the weaker market conditions. This area is made up of the suburbs Nightcliff, Millner Rapid Creek and Coconut Grove and Brinkin. Dwellings at this price point are generally in worse condition, however, are generally on larger allotments, being some of the first subdivided residential sections of the Northern Suburb region. The recent unsettled sale in the heart of Nightcliff for a 3- bedroom 2- bathroom updated brick home for a touch over $500,000 is evidence of this shift in affordability. The recent sale of 9 Burden Place, Millner, with a popular elevated configuration and 5- bedrooms, 2- bathrooms at $530,000 is another good example of increased affordability in this area. Rental yields for this segment have remained strong at 4.6% as at March 2018, up 0.2% from the previous quarter. We consider this segment one to watch heading through 2018, with bargains there to be snapped up.

Stepping up in price brackets, the ability to purchase a dwelling in the $500,000 range almost dries up completely in the popular Inner Darwin market segment. Ludmilla and The Narrows do offer some opportunities in this segment, however, with older homes requiring some work in less than desirable sections of the suburbs. Those with $500,000 in this area would more than likely look to the much more affordable unit stock littered around the Darwin CBD and inner city suburbs such as Stuart Park, Parap, Larrakeyah and The Gardens. Close to the CBD, Stuart Park offers a large amount of unit stock, with semi-detached 3- bedroom units able to be procured at this price point. This type of product is popular with many purchasers looking to have a small yard and greater portion of land on title, compared to attached units. Generally, at this price level, the unit would be well fitted out and most likely renovated. Dwellings can be purchased in this area around this mark, however, most likely would be pre-cyclone requiring a substantial amount of renovations, which sends the total entry cost well beyond half a million dollars.

The Darwin CBD itself offers ample opportunity to part with half a million dollars. At this price level, a potential purchaser could expect to procure a very modern 2- bedroom, 2- bathroom unit or a slightly older 3- bedroom unit, however, still in decent condition. Approximately 30% of the inner Darwin unit transactions in the first quarter of 2018 occurred at the half million price range (REINT,March 2018). The median price of this segment sits at $410,000 which is a further 10% drop from the first quarter of 2017. We expect this section of the market to continue to display soft conditions throughout 2018. With the Ichthys Gas Project construction phase coming to a conclusion, more unit stock may become available in the near future. This area is also popular with the investor, with rental yields sitting at 5.5%. Notably, Raine and Horne Darwin have highlighted the increased level of investor activity with reports on Channel 9 and the NT News (28.06.2018).

In the satellite city of Palmerston, located a short 20 minute drive south of Darwin City, $500,000 opens many doors to both building brand new dwellings and purchasing older properties. This area has experienced a healthy amount of transactions, with some of the highest sales volumes in the Territory in recent times. Dwellings constructed in the mid 1990’s to mid-2000’s in suburbs such as Gunn, Farrar, Bakewell, Durack and Rosebery with a three to 4- bedroom, 2- bathroom configuration are very popular with owner occupiers and investors alike, with ample stock available at the half million dollars price bracket.

Generally, this type of detached home would be of rendered masonry construction and have a standard fit-out with laminated benchtops and air-conditioning throughout. For those looking to start from scratch, the burgeoning suburb of Zuccoli has been very well received by the market. Whilst allotments are substantially smaller than the older more established suburbs, they are more affordable ranging from $120,000 to $300,000 for 300 square metres to 780 square metres. The price of construction has lessened in recent times, so a potential cheap parcel of land and an average build contract for a 3- bedroom, 2- bathroom detached dwelling would land directly in the half million range.

Like the Northern Suburbs, Palmerston offers attractive rental yields at 5.1%. (REINT, March 2018). We expect properties in Palmerston to track with the rest of the Darwin market, buoyed by the construction industry, population growth and essentially employment driven economy.

So whether an investor, an owner occupier or a first home owner, the greater Darwin market currently presents a wide range of opportunities with half a million dollars.

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