Despite recent reports to the contrary, Glenn Grantham, General Manager of real estate agency Raine & Horne Darwin, has dismissed talk that the Australian city of Darwin is set for a property market crash.
According to latest CoreLogic data, Darwin real estate values fell by 1.7 percent in the three months ending October 31, which Grantham says is a sign that the market is very close to the bottom of the current cycle.
“The statisticians have caught up with the current reality in Darwin,” he said.
“We’ve had hundreds of off-the-plan apartments settle in recent times and the additional supply in a small market such as Darwin has affected prices.”
The large number of off-the-plan settlements has also taken many buyers and investors out of the market for the time being, according to Grantham. For example, the first weekend of November saw Raine & Horne Darwin offer 35 properties for sale and register just 24 new buyers.
“But when low buyer numbers coincide with a small slide in prices, historically it means the bottom of the market is not far off,” said Grantham, who is tipping the Darwin property market will be back in full swing by the middle of 2015.
“We have an election in late 2015 and already the Northern Territory Government is starting to make announcements that will drive stronger business activity and consumer confidence,” he added.
These announcements include the tender for the North East Gas Interconnector, a gas pipeline linking the Northern Territory with the East Coast gas grid, and the release of more affordable housing measures.
In the meantime, Grantham said shrewd buyers and investors will be able to get in early and pick up some bargains before the market starts to gain momentum.
“The smart money is currently buying properties in inner CBD suburbs such as Stuart Park and The Gardens,” he added.
“In The Gardens, entry-level, two-bedroom apartments start from AUD$450,000, which are generating weekly rents of AUD$550. This is a very healthy 6.4 percent gross yield, with the prospect of decent growth to come.”
The other market that is due for a spike in values, according to Grantham, is Woolner, which is only 4 kilometres from the Darwin CBD. In Woolner, entry level two-bedroom apartments start from the low AUD$400,000’s and rent for between AUD$500 and AUD$520 a week.