With Darwin's median house price sitting at just under $600,000, first-home buyers might find some good buying opportunities in the Top End city.
Investors have had little to smile about in Darwin's property market of late. Buyer demand has fallen amid increased supply, selling ‘time on the market’ has risen, and prices are trending downward in most areas.
On the other side of the coin, first homebuyers might find some very good buys right now. For example, the median house price in Darwin is just under $600,000, having plunged by 11% over 2016, according to Domain Group’s quarterly report last December. Private treaty sales have produced an even lower median price of $520,000, as per CoreLogic RP Data figures in the month to 19 March.
Units have been selling for around $455,000 (Domain Group), although recent private treaty sales, again, seem to be much lower at a median unit price of $345,000, says CoreLogic RP Data.
Go north
To this end, the city’s northern suburbs are proving a good option for many buyers because they’re well serviced by large shopping precincts such as Casuarina Shopping Centre and have local amenities like the TIO Sports Stadium, Royal Darwin Hospital and various schools, according to property valuers Herron Todd White (HTW).
First homebuyers could also look at suburbs such as Wagaman and Moil, according to HTW. Both are close to local amenities like shops and schools, and would be ideal for the first homebuyer willing to budget for renovation work to basic properties.
“Scattered around this area is an abundance of ex-housing commission dwellings that can be purchased and with renovation, brought back to life,” says HTW.
Taking advantage
In this vein, there's a three bedroom, two bathroom house in Moil that's currently selling which is spacious and solidly built, and perhaps good value for just $529,000, as per Ray White Real Estate in Darwin.
Meanwhile in Millner, a modern two bedroom townhouse with a generous courtyard is selling for $355,000, as per Real Estate Central in Darwin City.
So there are opportunities while the market remains subdued and buyers are in control, says director at McGees Property, Martin Gore. He’s seen a slight increase in buyer activity for the traditional northern suburb homes, especially in the $550,000 to $650,000 price bracket.“As the large supply of housing on the market is absorbed and taken up it will create more balance between buyer and seller,” says Gore. “But the buyer is still very much in command. Without doubt the vast majority of buyer activity is the owner occupier with little to no investor interest.”
HTW also suggests that first homebuyers might take advantage of the state’s Home Renovation Grant, which offers a voucher up to $10,000, and a further $4000 under the Home Improvement Scheme, valid for renovation works costing up to $20,000.
Better still, those wanting to build a new property as a first home can apply for the first home owner grant of up to $26,000. Or, for those who want to buy an established property as a first home, there's a discount on stamp duty, plus a discount of up to about $24,000 under the territory’s first home owner discount scheme.
When might the investor market improve?
Darwin's 'time on market', a figure that shows the median time it takes to sell property, was the highest among all the capital cities for selling both units (121) and houses (108 days) as of mid-March, according to CoreLogic RP Data. These are relatively long periods for selling and as such, city based units are a particularly off limits for investors, says Gore.
“Investor demand is very low as the market is still nervous about the large supply of city units,” says Gore. “The question everyone is asking is who will occupy all the units currently taken up by the construction workers? Until there is some certainty or an answer to that question, investors are staying well clear of city units and the market as a whole.”
Gore notes that the Darwin market has traditionally been anti-cyclical to the east coast and southern markets.
Economic impacts
The territory’s property situation is largely to do with its local economy, which is heavily impacted by major resources and infrastructure projects that aren't always long term.
Indeed, analysts such as those from CommSec say that the Northern Territory market will face challenges in the next few years as key resource projects are either completed or near completion. This, coupled with slow population growth, weak demand for housing loans and a sharp fall in new housing starts will constrain economic momentum, according to CommSec.
Keep in mind that each suburb is different, however. For example, while owner occupiers continue to dominate the overall market, interstate investors are increasingly among the general buying group, as general manager of Raine & Horne Darwin, Glenn Grantham wrote for ReCon earlier this month.
To support this view, Grantham noted that several projects are on the horizon, including the $500m upgrade of HMAS Coonawarra and Larrakeyah Barracks, and the $250m Darwin Luxury Hotel development. These types of projects tend to increase demand for homes as the population fluctuates.
By JP Pelosi.
See also:
Demand for Darwin rentals at an all-time high