The month in review: Darwin
By Herron Todd White
We can safely say that in Darwin, traditional older properties haven’t had the easiest run. The Top End property landscape has gone through significant events twice in the 20th century. First was the widespread bombing by the Japanese in February 1941 through to 1942, then some 33 years later the devastating Cyclone Tracy.
The closest thing to classic residential dwellings in Darwin include the older elevated dwellings found in Larrakeyah, Parap and Fannie Bay. Many of these dwellings were constructed in the 1950s during the rebuild and expansion of Darwin following World War II. Entry level to these locations is now in excess of $700,000. This price point is driven by land value rather than the added value of the traditional dwelling. These properties remain popular in the market place, largely driven by location. Many purchasers choose to retain the original dwellings, undertaking significant renovation campaigns to restore and remodel. Features of classic Darwin
residential property include elevated or low-set dwellings, excellent cross ventilation with use of high ceilings, louvre windows, wrap around verandahs and good sized balconies. The allotments tend to be heavily landscaped with large trees to provide shade from the afternoon sun. Notably these dwellings have open space underneath so the breeze can move through the dwelling, cooling it quickly once the afternoon sun sets. The more modern version of the classic elevated homes are the Troppo designed dwellings. The market shows that this classic style of residential property is preferred by owner occupiers rather than tenants.
When mentioning classic dwellings in Darwin, we have to include the large scale ex-government housing from the late 1970s and early 1980s which are predominantly found in the northern suburbs. This type of dwelling is generally detached ground level 3-bedroom, 1-bathroom of brick construction or an elevated 3-bedroom 1-bathroom metal clad dwelling on largely 800 square metre blocks. They make up a significant proportion of the second hand stock which is majority owner occupied. On average an ex-Government house in this area will range from low $400,000s to mid $500,000s depending on renovations.
This figure is greatly determined by the location. The Nightcliff LGA experiences the highest prices and Malak and Karama on the other end of the scale are the least preferred. Generally we see first home buyers looking to these suburbs to get their foot in the door of the property market as inner city suburbs such as Parap and Fannie Bay are considerably more expensive. These types of properties have performed fairly well over the past ten years, however experienced a steady decline from 2014 onwards. Until first home buyer incentives are returned for older stock we will more than likely see continued softening in this sector of the market in the short to medium term.
With the move into the 21st Century, there has been a substantial shift away from this breezy open type of property, mainly due to the cost of construction, with newer developments such as Muirhead, Zuccoli and Lyons. These suburbs have strict building covenants implemented which are in place to increase homogeneity and general street appeal. These types of homes are of generally solid masonry construction with a distinct reliance on airconditioning to cool down the interior. However, the Muirhead subdivision has been planned efficiently to take advantage of the breezeways. These modern style homes are generally on smaller blocks, with less upkeep required than their older counterparts and are therefore popular with investors. The majority of houses are sold with Defence Housing long term leases exhibiting rental yields of approximately 6% and are therefore very attractive to the long term investor population. You can pick up a basic house and land package in Muirhead for approximately $700,000, while the average land and build in Zuccoli is in the low to mid $500,000 price bracket depending on the size and finishes. These low maintenance new homes are strongly sought after by owner occupiers in this current weak market due to stamp duty and first home owner grant concessions.
The unit boom of 2006 onwards has also greatly changed the property landscape of the Top End. This is no more evident than in the CBD. The initial gas project delivered by ConocoPhillips in 2006 and the current Icthys Inpex Gas Plant Project which was announced in 2011 significantly increased activity within the unit market with developers capitalising on the increased demand from investors to cater for the influx of construction workers. While this is currently posing an issue with an over-supply to the market, this type of stock experienced strong growth through the late 2000s, hitting its peak in late 2013.
Now the average median 2-bedroom unit price in inner Darwin is approximately $540,000 (REIM Quarterly). While this figure does seem strong, we note it is heavily skewed by the new developments being released which are fuelled by pre-sales, and not an accurate reflection of the overall market. Entry level 2-bedroom unit stock constructed in the ConocoPhillips boom from the mid 2000s can be purchased in the low $400,000s.
Again, the lack of first home buyer concessions are hitting this older unit segment the hardest and we see no positive movement in this sector at all in the short to medium term without some governmental influence on the situation.