Darwin well-positioned as investor hotspot but dependent on mining and public sector: RP Data
With a total year-on-year returns of 16.6% for houses and 9.6% for units and yields of 6% in the year to October, Darwin has solidified its reputation as very desirable location for property investors.
RP Data senior research analyst Cameron Kusher says much of this growth is being driven by the mining and resources sector as well as spending from the public sector.
MEDIAN HOUSE PRICE | QUARTERLY CHANGE | RENTAL YIELD | |
OCTOBER | $525,000 | 1.2% | 5.9% |
SEPTEMBER | $534,000 | 3.6% | 6% |
AUGUST | $545,000 | 4.8% | 5.7% |
JULY | $543,500 | 4% | 5.7% |
| MEDIAN UNIT PRICE | QUARTERLY CHANGE | RENTAL YIELD |
OCTOBER | $427,000 | 2.7% | 6% |
SEPTEMBER | $423,000 | 5.5% | 6% |
AUGUST | $420,000 | 7.1% | 5.8% |
JULY | $410,000 | -0.2% | 5.9% |
Source: RP Data. Note the median price is the middle price of all settled sales over the three months to the end of the final month.
However, Kusher also notes that the recent rise in Darwin house values – up 10.6% for the year to date for houses and up 8.9% for units – has come following a “fairly significant correction in values through most of last year”.
“At one point last year Darwin values were down 15% on an annualised basis.
“Values have increased, but they can be volatile," Kusher says, pointing out that because Darwin is tied to the mining boom it is very dependent on demand from China.
Apart from the mining and resources sector boost and public sector investment, Kusher says there are also “significant incentives” from the Northern Territory government to encourage property purchases.
Currently the NT government continues to offer a $7,000 first-home owner grant for both existing and new homes (in contrast to NSW and Queensland, which offer $15,000 for first-home buyers buying a new home but nothing for existing homes) as well as a $10,000 'BuildBonus' for home buyers building or purchasing a new home until the end of 2012. In addition the NT government also offers a first-home owners stamp duty concession of up to $26,730 (the duty owned on the first $540,000 value of a property).
Kusher says the Darwin market is also appealing to investors because many people won’t live there long term.
“There are a lot of renters and people who don’t stay long. This means more opportunities for investors to negotiate the rent upwards when new tenants move in,” he says.
Kusher expects the Darwin property market to trend higher in the long term, but “perhaps not at same rate it is currently trending upwards”.
