Darwin property market leads the nation but affordability headwinds for 2013: Colliers International
Buoyed by its multi-billion dollar resource projects, Darwin ranks as the strongest property market in Australia with strengthening buyer activity and exceptionally high demand for houses recorded in the final quarter of 2012.
There were 825 property sales recorded over the quarter totalling $414.3 million, a 14% increase on the volume of sales in the September quarter where there were 732 transactions, totalling $364.8 million, according to a new report by Colliers International.
“In the December quarter the median house price was recorded at $600,000 and it was found that in Darwin 43 % of all house sales were recorded between $500,000 and $600,000” says Colliers International analyst Lianna Georges and author of the latest Darwin Residential report.
Rents also rose “substantially” over 2012 with average rental rates now around $700 per week for a three-bedroom house and $550 per week for a two-bedroom unit, “making Darwin very appealing to investors”.
However, Colliers also notes that the increased rental rates have pushed up the cost of living in Darwin and may "place home-ownership out of reach for young locals”.
Georges warns that a lack of affordable housing will remain a key issue for 2013 with minimal stock priced under $600,000, while changes to Northern Territory government incentives, could potentially affect home ownership.
“The previous First Home Buyers scheme included no stamp-duty up to a threshold of $540,000, a $7,000 grant to first home buyers and the addition of the $10,000 Build Bonus Grant for new dwellings. These incentives have been replaced by a new $25,000 First Home Buyers grant for the purchase of a new dwelling, or a $12,000 grant for an existing dwelling; although home buyers are now liable to pay for stamp-duty on their first home,” explains Georges.
A search on realestate.com.au for properties under $600,000 reveals no free-standing houses among the 197 properties listed under this threshold, with two and three-bedroom units dominating listings under this limit.A four-bedroom house and land package is offered at $640,000 through Helen Saunders of KRK Properties – Mandurah, but does not disclose the address with the more than half of the listing devoted to describing the billion dollar liquefied natural gas projects in the pipeline or underway in and around Darwin.
According to RP Data, Darwin values for the year to December increased by 11.7 %, far surpassing Sydney where a 2.5% increase in house prices was recorded.
The unit market continued to record steady sales growth in the December quarter and offered a more affordable housing option for first-home buyers.
Over the course of 2012, the strongest price band for unit sales was $400,000 to $500,000 comprising 31% of all unit sales.
Georges says that as 2013 unfolds, Darwin will be “keenly observed particularly in regard to rental rates as interstate investors look to purchase property with enticing yields; although this has the potential to be counteracted by the rising cost of living that may place home-ownership out of reach for young locals”.
“The year ahead will be an interesting time for Darwin’s property market as the Territory continues to experience unprecedented economic development.
“The past 10 years have seen Darwin transform from a sleepy regional town, into a dynamic capital city that is burgeoning with trade, resource projects and new development.
“As Darwin continues to grow over the next decade and attract new residents, the need for infrastructure development to assist housing construction will become apparent,” she says.
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