RESEARCH & FORECAST REPORT
DARWIN RESIDENTIAL
Q3 2014| RESIDENTIAL
www.colliersnt.com
September: “Capital growth steadies”...
SEPTEMBER QUARTER HIGHLIGHTS
• Darwin median house price recorded at $648,000 • Palmerston’s median house price recorded at $572,500 • Increased volume of apartment sales due to new developments settling • Slower level of transactions from June quarter
RESIDENTIAL MARKET OVERVIEW
In the September quarter the Darwin residential market recorded steady sales figures,
although total sales volume was lower than recorded in the June quarter.
The total sales value of all residential property in Darwin and Palmerston in the
September quarter was $422.6 million and comprised of 770 transactions. By comparison
in the June quarter of 2014 there was a total value of $489.6 million with 935 transactions
recorded. In the regional breakdown, Darwin and the Northern Suburbs recorded $343.2
million in sales, whilst Palmerston recorded $79.5 million in sales.
It was noted that units in the Darwin area comprised of 57% of all property sales in the
September quarter. The majority of these units were settlements of newly developed
buildings, with only a small portion of sales coming from established apartment stock. It
appears that the new apartments have absorbed the bulk of the market demand and as
such, we have seen the pricing of established stock come back slightly.
Recent figures published by RP Data indicate that Darwin still records the highest rental
yields in Australia, with houses currently returning a yield of 5.9% and units returning a
yield of 6.0%. Darwin has maintained the highest rental yields in Australia for the past two
years.
MARKET INDICATORS FORECAST 6 MONTHS
OVERALL PERFORMANCE
TRANSACTION ACTIVTY
SUPPLY
DEMAND
SENTIMENT
VACANCY RATE
ECONOMIC GROWTH
INFRASTRUCTURE
POPULATION GROWTH
Suburb Transactions Median Price
Bellamack 16 $665,000
Nakara 13 $680,000
Karama 12 $542,000
Durack 11 $560,000
Rosebery 9 $710,000
Ludmilla 9 $672,000
Jingili 9 $640,000
Woodroffe 9 $470,000
SUBURBS WITH MOST ACTIVITY
3 Sariago Court, Woolner
COLLIERS INTERNATIONAL —P. 2
RENTALS
There had been a noticeable market adjustment in the Darwin rental
sector over the September quarter. Nonetheless, RP Data reported that
Darwin maintains the strongest rental returns in Australia with an
average yield of 5.9% for houses and 6.0% for units.
As expected, the abundance of new stock has helped balance supply
issues and has eased the demand that previously pushed rents to
unsustainable levels. In particular, there has been a significant increase
in CBD apartments and in new houses in the Palmerston area. This has
seen an increase in the Colliers in-house vacancy rate which was
recorded at 3.3%. As a result, rental returns have stabilised and it is
anticipated that there will be limited growth in rental rates over the next
6 -12 months.
PROPERTY INNER DARWIN NORTHERN SUBURBS PALMERSTON
House- 3 Bed / 2 Bath $700—$900 $500—$700 $500—$700
House- 4 Bed / 2 Bath $990—$1100 $700—$900 $650 —$850
House- Executive $1000—$1500 $800—$1000 $800—$1000
Unit- 1 Bed / 1 Bath $450—$550 $350—$400 $350—$400
Unit- 2 Bed / 2 Bath $600—$800 $450—$650 $400—$600
Unit- 3 Bed / 2 Bath $700—$900 $550—$750 $500 — 700
Unit- Executive $800- $1200 n/a n/a
WEEKLY RENTAL RATES
UNITS
Apartment sales were the strongest performing sector in the September
quarter, although this was notably due to a large amount of settlements
on new developments. The highest volume of sales in 3 years was
recorded with 443 transactions recorded and a total sales value of
$238.5 million. This also reflected a stronger median price of $530,000,
which had increased from the previous quarter where it was recorded at
$510,000. By comparison in the June quarter there were 374 apartment
sales recorded with a total sales value of $196 million.
From a price range perspective, 30% of apartment sales occurred
between $500,000 and $600,000 and a further 25% of sales occurred
between $400,000 and $500,000.
Inevitably due to new development, Darwin CBD recorded the most sales
activity over the September quarter with 206 transactions and a median
price of $537,825. This equated to $112.7 million in sales and comprised
47% of all apartment sales in Darwin and the Northern Suburbs. The
highest CBD sale was priced at $1.87 million for an exclusive apartment
on the Esplanade.
The second highest volume of sales was recorded in Parap where there
were 116 transactions with a median price of $534,500. This equated to
a total sales value of $64.7 million and was attributable to the settlement
of new apartments in The Avenue complex on Salonika Street, Parap.
Parap has become a popular suburb for apartment purchasers, as it is 5
minutes out of the CBD yet still retains a relaxed village atmosphere and
boasts its own Saturday village markets.
In Palmerston, apartment activity was slower with 36 transactions
recorded. These sales totalled $16.3 million and reflected a median price
of $406,000. By comparison in June quarter there were 76 transactions
record with a total sales value of $33.4 million. In the September quarter,
the majority of sales in Palmerston were priced between $300,000 and
$500,000 with the lower priced stock reflecting the sale of established
apartments in the area.
DARWIN UNITS – TOTAL SALES VALUE
Source: Land Titles Office & Colliers International Research
RESEARCH & FORECAST REPORT | Q3 2014 | RESIDENTIAL | DARWIN
Source: Colliers International Research & Realestate.com.au
COLLIERS INTERNATIONAL — P. 3
DARWIN HOUSE PRICES
In the September quarter the volume of house sales was slightly down
on the previous quarter, although overall sales activity was steady.
There were 153 transactions recorded with a total sales value of $104.6
million and these sales reflected a median price of $648,000.
By comparison, in the June quarter there were 161 transactions
recorded with a total sales value of $121 million and a median price of
$643,000.
As such, the majority of Darwin houses that sold in the September
quarter continued to be priced between $500,000 and $600,000 and
comprised 30% of all home sales. This was followed by a further 26%
of house sales priced between $600,000 and $700,000, which reflected
older homes in the Northern Suburbs.
In terms of strong buyer activity, the suburb of Nakara recorded the
highest level of buyer activity for houses in Darwin with 13 transactions
recorded and a median price of $680,000. This was an unusual figure
as Nakara, has typically been a tightly held suburb recording few sales
every year. The second highest level of buyer activity was recorded in
Karama, with 12 transactions recorded and a median price of $542,000.
Karama has grown in popularity over the last few years as it continues
to offer a quasi affordable entry point into the market for young families.
PALMERSTON HOUSE PRICES
The volume of house sales slowed in Palmerston over the September
quarter with 81 transactions recorded. This equated to total sales value
of $47.2 million and reflected a reduced median price of $575,000.
By comparison, in the June quarter there was a total sales value of
$75.2 million with 126 transactions recorded and a median price of
$588,000. It appears that new land releases in Palmerston may have
drawn buyers away from the established house market, and encouraged
buyers to buy vacant land to build their own homes.
In terms of pricing, buyer activity in Palmerston continued to be highest
between $500,000 and $600,000 and comprised 35% of all home sales
in the area. This was followed by 30% of houses sold between $600,000
and $700,000, and reflected sales in the newer suburbs of Palmerston
such as Bellamack and Rosebery.
Over the September quarter the most popular suburb in Palmerston was
Bellamack with 16 sales recorded and a median price of $665,000.
This was followed by Durack where there were 11 sales recorded and a
median price of $560,000. In general, there is limited existing houses in
Palmerston priced under $500,000.
LAND
Land sales dried up over the September quarter; however this trend is
not too unusual as it is reflective of the nature of bulk land subdivisions.
There were no land sales recorded in Darwin during the September
quarter, however this is expected to increase over the next 6-12 months
as further blocks are released in Muirhead.
In Palmerston there was also a slowdown in land sales with just 56
settlements and a total sales value of $16 million. These sales equated to
a median price of $265,000, and reflected a large number of titles issued
for land in Johnston.
It is anticipated that over the next few months there will be another rise in
land settlements as further titles are issued in the new stages of Zuccoli
and Durack. These new subdivisions have been marketing smaller
allotment sizes to accommodate increasing demand for more affordable
land prices, and this is anticipated to help alleviate the strain for buyers.
RESEARCH & FORECAST REPORT | Q3 2014 | RESIDENTIAL | DARWIN
TOP TEN SALES
Suburb Property Description Price
Darwin Unit 4/68 B Esplanade Apartment $1.87 m
Larrakeyah 17 Hickey Court House $1.65 m
Jingili 47 Freshwater Road City Rural $1.45 m
Nightcliff 5 Coolibah Street House $1.30 m
Darwin Unit 436/130 Apartment $1.30 m
Fannie Bay 7 Kellaway Street House $1.25 m
Parap 47 May Street House $1.205 m
Darwin Unit 22/99 Gardens Road Apartment $1.20 m
Darwin 29/3 Manton Street Penthouse $1.20 m
Ludmilla 10 Bremer Street House $1.145 m
Source: Land Titles Office & Colliers International Research
2/10 Sovereign Court, Coconut Grove
www.colliersnt.com
OUTLOOK
Overall the Australian economy has fared well over the past 3 months despite tightening federal
conditions. Whilst some segments of the economy have experienced flat conditions, the property
market has been at the centre of economic activity in 2014 with strong activity in Sydney, Queensland
and Darwin.
The official cash rate continues to remain on-hold at 2.5%, with many economists predicting that rates
will remain stable until early next year. The Reserve Bank of Australia has been cautious with interest
rate movement so as not to add too much heat to the property market, however over the past 3
months it appears that capital growth is stagnating in some areas. As such, many anticipate that the
most prudent course moving forward would be to keep interest rates stable.
According to the Territory Economic Review, the NT benefits from a strong workforce and records the
highest employment participation in Australia at 72.6%. In terms of unemployment, the Territory
records the lowest unemployment rate of all jurisdictions at 4.3% well below the national average of
6.0%.
Economic activity in the NT continues to be centered on projects and construction activity, with both
sectors contributing positively to job creation in the Territory. In 2013-14, total construction work in the
Territory was recorded at $6.0 billion and private non-residential reflected construction work done
increased by 3.7 per cent to $1.1 billion.
In the residential sector, private residential construction was the highest annual total on record and
increased by 35.6 per cent to $729 million. This growth has been primarily driven by the construction
of several large scale unit developments in Darwin and city fringe suburbs. As discussed previously,
over the past 12 months there has been an increased supply of new dwellings in Darwin, particularly
of apartments. The bulk of this demand has so far been absorbed by investors, although now that a
large portion of these properties have settled, it appears that remaining stock is helping to alleviate
supply pressures and therefore helping to stabilize property prices in the Territory.
Moving forward, the indicators for the Darwin residential market appear stable for the year ahead and
steady transactional activity is anticipated over the next 6 months.
Information Sources:
Easy Access, ABS, Land Titles Office, REINT, NT Treasury, Territory Economic Review, RP Data, Westpac Melbourne Institute, Realestate.com.au, Colliers International Research Darwin
RESEARCH & FORECAST REPORT | Q3 2014 | RESIDENTIAL | DARWIN
1430 employees in
43 offices throughout Australia and New Zealand
12,300 employees in
522 offices worldwide in
62 countries
Accelerating success
COLLIERS INTERNATIONAL
396 Stuart Highway
Winnellie, NT, 0820
TEL 08 8997 0888
FAX 08 8997 0899
RESEARCHER
Lianna Georges
Research Analyst
EMAIL [email protected]
Colliers International does not give any warranty in
relation to the accuracy of the information contained
in this report. If you intend to rely upon the
information contained herein, you must take note that
the information, figures and projections have been
provided by various sources and have not been
verified by us. We have no belief one way or the
other in relation to the accuracy of such information,
figures and projections. Colliers International will not
be liable for any loss or damage resulting from any
statement figure, calculation or any other information
that you rely upon that is contained in the material.
COPYRIGHT - 2014