Improvements lacking in entry level Darwin property: HTW

Darwin’s northern suburbs have always been a hotspot for the mum-and-dad investors and first home buyers, according to the latest Herron Todd White (HTW) residential report. 

But the HTW report suggests this market segment has felt the effects of the market contraction in terms of both sales volume and value over the past two years.

HTW noted towards the end of 2014, the market segment was difficult to penetrate with strong competition driving prices well above achievable and sustainable levels, particularly for first home buyers who were competing with investors looking to capitalise on strong yields.

"We consider at this point in time, this particular market segment has probably reached around five or six o’clock on the property cycle clock which says values have bottomed out and activity remains subdued – a holding pattern if you like,"  the valuation firm said. 

"With this, opportunities to enter this market begin to open up at much more affordable prices."

Currently the Northern Territory government is offering a first home owner discount, which is a full stamp duty concession on the initial $500,000 value of the home, resulting in savings of just under $24,000.

Also on offer is a home renovation grant of up to $10,000 on an established home. These are significant savings and provide a home owner the opportunity to add value by completing renovation and upgrade works to their property.

"In recent times, we have seen a significant number of ex Housing Commission dwellings hit the market, as the government looks to turn over stock," HTW said.

"There is no question that these are the most basic of structures with few quality fixtures and fittings, however, like most of the northern suburbs, they were well constructed on solid foundations."

It’s with this type of property that good opportunities exist for first home buyers – purchase an entry level dwelling in a subdued market and take full advantage of the grants on offer from the Northern Territory government to improve your property and add value.

Renovations can be expensive and it’s certainly a fine line between the cost versus value relationship of any works completed.

"The advantage in this space, and where you strengthen your margins, is completing as much of the work yourself – obviously utilising trades where compliance is required.

"If you’re smart about the type of works you complete and the standard to which they are completed, there are real possibilities to increase the overall appeal and value of your property.

"Given our climate and lifestyle in the top end, provision of outdoor living space is essential.

"Verandah and balcony extensions tend to be popular additions in both elevated and ground level dwellings and can in some instances double as covered car accommodation.

These types of improvements are typically lacking in the entry level product and can really improve the utility and functionality of a dwelling by incorporating indoor and outdoor living, it said.

Swimming pools also feature as common upgrades on town blocks, whilst granny flats and sheds tend to dominate the rural residential areas.

These types of construction can come at some significant costs, however in a rural residential market where owners will typically have motorbikes, boats and trailers, good shedding is considered important and does increase the overall marketability of a property.

"Quite often, sheds are fitted out to a habitable standard and may or may not be certified for living. In the instance where elderly parents or teenagers may require detached secondary accommodation, converted sheds can provide this to a reasonably good standard whilst minimising costs compared to rendered block constructions.

"Regardless of the type of renovation or addition to a dwelling either in the rural or town areas, what is apparent is that without such improvements being made to a property, there is limited scope for capital appreciation of the asset.

"To simply rely on upswings in the market to see an increase in value is not likely to yield you anything in the medium term and owners should consider very carefully what type of renovation or addition will provide the most bang for their buck."

An example was a two bedroom Marrara unit which has been sold for $300,000 (pictured above).

Located at 5/5 Dornoch Court, the recent renovated unit comes with two bedrooms, separate lounge and dining areas, rear courtyard and side access. 

It is close to Marrara shopping centre and airport.

Another renovated house in Jingili has been recently sold for $425,000 (pictured above).

Set on a 821 square metre allotment, the house at 15 Winton Street features three spaicous bedrooms, open plan living, and extensive verandah.

It located only five minutes from the Darwin International Airport.