Darwin June 2018

The month in review: Darwin

By Herron Todd White
June 2018

At the halfway point of 2018, the Darwin property market has tracked as expected with minimal growth, some stabilisation in certain sectors and other sectors have not fared well. \

The stronger performing sector of the market is dwellings. Sales volumes have continued to trend in a steady fashion in both the northern suburbs and Palmerston. Both areas have stabilised and we expect that this will continue into the short term. In the Palmerston dwelling market, we have now seen the first million dollar sale since July 2013. The sale property, 28 Smith Court, Bellamack settled for $1.015 million in March 2018 and was positioned on the tightly held acre blocks in Bellamack. What the sale reflects is that there is confidence at the upper end of the market and this is further supported by another acre block sale, 20 Smith Court, Bellamack, which settled for $960,000 in May this year. Although there are transactions occurring for properties at the higher end, there may be an increased selling period in order to achieve the sale prices.

Entry-level stock continues to tick over in Palmerston, with sales continuing to occur in Gunn, Durack and Rosebery. The northern suburbs sales are also similar to sales occurring in Leanyer, Tiwi, Malak and Karama. There is now consistent sales evidence to show that the market has come back 20% to 30% from the 2013 to 2014 period or back to circa 2008 to 2009 value levels for both sectors of the market.

Agents report that there has been an increased level of enquiry in the rural residential area. Although there hasn’t been the volume of sales to support this claim, we have now started to see evidence of higherend sales occurring which we have not seen over the past 12 months. 150 Shewring Road, Mcminns Lagoon settled in March this year for $1.62 million. The property was marketed over a 12 month period. Given the quality of the property, we would consider this marketing period to be reflective of the market for this type of property, meaning longer selling periods are required for higher end stock. The sale provides a good benchmark for prestige property in the rural area.

On the lower end of the rural residential market, we are starting to see a number of sales of uncertified structures, sheds or demountable style homes. This type of property is common in the rural residential market as it is priced for entry-level buyers. Although the contracts that we are seeing appear to be in line with the market, there has been some resistance amongst lenders to lend on this type of asset which has resulted in some contracts falling over. Given the depressed market conditions and asset type, we are not surprised that this is occurring and would caution potential purchasers to do their due diligence prior to contract as they may require larger deposits or guarantors.

Unfortunately, the unit market has continued to struggle. Given the depressed market conditions, the only vendors that are selling are the ones who are forced to. This has been particularly evident in the northern suburbs and Palmerston since the start of 2018 and has put downward pressure on value levels. Unfortunately, we have also started to see a number of mortgagee in possession sales which are further adding to the downward pressure. We would caution any potential vendors looking to offload this type of stock that the market is struggling and potential purchasers are aware of the state of the market and are constantly looking for a bargain.

Land is tracking steadily in the northern suburbs with Northcrest continuing to release land and construction in the display village now starting to occur. The only other option potential purchasers have is Muirhead that is nearing its completion of a two part release in Stage 7. In Palmerston, there are numerous developers in competition releasing land in the Zuccoli sub-division. Developers appear to be offering a range of discounts and prices to attract purchasers of vacant residential land. Given the broader market conditions for the Territory, we anticipate that this sector of the market will continue to track as is in the short to medium term with more emphasis on price point, especially in Zuccoli.

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