NT Darwin - is this the start of recovery?

Herron Todd White reports still have Darwin house and units sitting at the bottom of the cycle. It's been at the bottom of market for quite a few months now.

https://storage.googleapis.com/htw-...w-month-in-review-august-2019_residential.pdf

Super low interest rates and substantial territory funded buyer incentives might be starting to have an effect.

"...first-home owners building or buying a new home will receive up to $50,601, while up to $28,601 will be given to those buying an established residence."

"Other initiatives include construction grants between $20,000 to $30,000 for the first 600 people to build a new home to live in; and up to an $18,601 stamp duty concession for people buying or building a new or established home to live in."

NT government offering grants, concessions to boost property sector but experts warn more needed

I'm seeing some greenshoots for Gunn (Palmerston) where I have an IP currently let at $350/week and coming up for renewal mid September.

House prices in Gunn are starting to climb back up. The lowest priced property for sale is now seeking offers over $389k. Rents are starting to climb too. 5 months ago (when I last let my property) you could find rentals for $350/week. There is now nothing being offered under $380/week

 

Last I heard the NT population is still shrinking, which is terrible for property market prospects, since this means there is falling demand for housing. Even if nobody is building any new dwellings at all, the gap between supply and demand is still widening. That generally only sends prices one way.

I'm sure the market will turn around one day, and there might be good buying conditions and value for money right now, but I can't see how a recovery can start until population growth returns.

 

Don't forget to factor the dry season in. It's party time tight now and people generally feel pretty good. Property normally does better at this time of year.

I suspect that we've hit the bottom, but it's still too early to tell

 

Population is dropping, crimes up, businesses are closing in droves, poor government....

I’d love to see it on the up as I’ve got two houses here but can’t see it changing very soon.

 

The legend goes.... they jinxed the place when they named it Darwin.

"Survival of the fittest" is a phrase that originated from Darwinian evolutionary theory as a way of describing the mechanism of natural selection.

In order of the fittest.

1. NSW
2. Victoria
3. QLD
4. Western Australia
5. South Australia
6. Tasmania
7. Northern Territory

 

I’ve been reading up on the 18 year property cycle theories in Australia, and whilst some people are saying that Sydney and Melbourne are in the mid cycle slowdown, with grow predicted until 2026, where does that put Darwin would you say? If the recession years (usually 4?) surely we should see recovery (and another boom) on the horizon soon?

 

You can't just put it down to charts and timings.

Something needs to happen up here to trigger the recovery first - namely population growth.

Only once people start moving back to Darwin will we start to see some sort of recovery.

 

That being said, I think we might be seeing the floor soon, if we're not already there. Unemplyment - although much higher than it was - is still low, wages are good and houses are now super-cheap.

There comes a point where things are so affordable that people will buy.

 

Sure, I completely agree. It's difficult to know when that might be. I've read in a few places that there's $24b in projects coming to the NT in the next few years but it's hard to know a) what kind of number of jobs that might translate to, and b) whether it will actually happen and in what timeframe.

The last time I was up there there were certainly a number of new cafes and pubs opened, you can see it would be an appealing place to move to once the jobs are there

 

but are they still there 6 -12 months down the track, or in one piece????

 

It's hard to read, is it an indication of the very start of a recovery or an optimistic false start

 

As someone who lives here and has the finger on the pulse.....it's impossible to know. There is always talk of projects etc in the near future.

Even if something does happen there is still an oversupply of units that needs to be soaked up before any real growth can commence.

That all being said I reckon Darwin is at the point now where it's worth keeping an eye on. Most of the decline has already happened and growth will kick in eventually. It's too important for Australia's trade, defence, intelligence, tourism, resources and humanitarian industries to leave for too long.

 

I have been noticing a lot of darwinians in Townsville lately, not a lot are planning to move back. Must be pretty bad in the NT?

 

It is tough.

 

There is certainly a lot of movement again, I suspect mainly locals getting into the market, especially on the coastal fringes, parap, fannie bay, nightcliff, rapid creek. We have snapped up 2 places at "todays" land value in the last 12 months and would love another 2 resi and possibly a comm.

Now, how about this.

Prediction time: 2-3% growth until the August election. June/July/August Sco-Mo and a cohort of cabinet members make record investment announcements into the NT, conditional on the NT voting in the CLP. CLP elected in a hung parliament with conservative independants holding the cards. Floodgates open Q3 20/21 with massive influx of projects all at once (remember conoco philips). Property prices go nuts, possibly worse than the Inpex boom.

 

You crystal ball is a tad shinier than mine....

You're right about the locals though. And it's not just the coastal fringe. It's honestly cheaper to buy than rent. If you're up here for any amount of time buying is now getting close to a no-brainer.

A friend of mine bought a 3 br townhouse for $280k. It was by no means a chateau but because he spent so little on it, they could safely have a couple of kids and his wife could study at the same time. Stress free.

At the end of it all they'll have a bonus townhouse biking distance to the CBD and beach.

They'll have paid tonnes off by then as well so if they ever decide to leave they'll be able to rent it out positively geared ...regardless of what the market up here is doing.

 

Wow Hammer, can you share which suburb?

 

It surely can’t get any cheaper. Hope you guys are right with your optimism

Upgrades at ConocoPhillips
Shiplift
Prawn Farm
Two more inpex trains
New Lithium mine
Defence upgrades

Plenty coming up if it all goes ahead.

Hope so my property in palmy is still a lemon even after owning it around seven years it’s still worth less than I paid.

On the other hand this crash gave me the chance to pick up another place cheap in the northern burbs.

 

I'm wary about ringing the bell for the bottom but it's pretty clear that any house in 0810, PPOR-able condition under 400k is changing hands pretty quickly now.

Palmerston is still not good (sorry @Darwin55) the CBD remains a basket case and the rougher areas of town have only gotten rougher with the economy the way it is.. but it's clear that people are definitely going shopping now in certain areas.

That being said, Oct/November is often when a lot of stuff happens too....so I still don't feel comfortable "calling it". I suspect we'll only know once the bottom has passed ...

 

I suspect you might be right, we'll only know once it's passed. Do you think the Santos acquisition has pricked ears up a little, or is it not big news on the ground up there?