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Warning on Darwin

Discussion in 'General Property Chat' started by hammer, 23rd Mar, 2016.

  1. hammer

    hammer Well-Known Member

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    This is a community service announcement to hopefully protect some of the people here.

    Blind Freddy could tell you that Darwin along with Perth have been hurt by the mining crash etc....

    But it's not as bad as I was expecting. It's a bit curious.
    Darwin's property listings seem to have hit a wall at 1500 properties for sale at any one time. Prices have dropped but not the total carnage I was expecting.

    I suspect that this is due to the very low unemployment rate of 3.5 percent. This keeps prices high as there's enough work to support repayments.

    But here is where it gets dangerous.

    3.5 percent is GUARANTEED to only be a temporary thing due to the inpex project finishing the construction phase.

    Darwin's population is approx 140000. Of which approx 100000 (I'm being generous) are counted in the ABS stats (over 15 and not in defense).

    So currently there are 3500 people out of work. Which is up from a couple of years ago, but by no means a disaster.

    8000 people are currently employed on the inpex project, or 8 percent of the population. And many other indirect services benefit from this project as well.

    This project is due to wrap up mid next year, leaving a skeleton production crew in place of about 600 people.

    So that's 7400 jobs lost. Or a 7(ish) percent increase in the unemployment rate, and that's a best case scenario as a lot of service providers will have to either downsize or close.

    The only way it could be less is if people leave town which a lot will do.

    So we're either looking at 10 percent unemployment or a huge spike in the already high vacancy rate or both.

    This isn't a guess, this is inevitable. All Darwin's eggs are in one basket.

    If any of you are considering investing in Darwin, I urge you to reconsider.

    It's well known that things will slow down after inpex. Realising how much has been a shock. Alarm bells are ringing. Be careful out there.

    Peace. H.
     
    Bran likes this.
  2. lightbulbmoment

    lightbulbmoment Well-Known Member

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    I think inpex will be a couple of years yet the media always throw out these finish times for gas plants and they always blow out and go way over budget.
     
  3. lightbulbmoment

    lightbulbmoment Well-Known Member

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    And yes I said it two years ago and ill say it again. Once inpex, barrow , wheastone is all in production big things are gunna change.
     
  4. tapouttim

    tapouttim Member

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    Just relet my apartment and had to drop the rent substantially to get it rented .I had been looking at the market and watched prices drop and properties remain empty. Renters are very aware of the supply surplus and are looking at rent reductions and are prepared to move to get one. I got someone in very quickly but will have it on the market for next financial year .

    tim
     
  5. hammer

    hammer Well-Known Member

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    You're right. Everybody on the street knows that things will slow down.....but it's not until you sit down and really do the numbers that the sheer scale of that change hits home.

    People think that Darwin is bigger - it will never be like Gladstone etc...I'm not so sure now. :s
     
  6. Gabba

    Gabba Member

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    The Inpex main village holds approx 3000 - 3500. On 2/1 or 3/1 rosters this would account for approx 5000 workers that don't own or rent property in the area.
    This doesn't account for money that may be spent in the community and the flow on employment from that. But it does does put a bit of a dampener on the numbers scare mongering.
    Compared to the workforce in Gladstone on the 3 LNG sites INPEX is a baby (worked at all 4).
    What other industry's are in Darwin?
     
  7. hammer

    hammer Well-Known Member

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    Yes it does. Great to hear insight from someone within the industry.

    Didn't mean to go scare mongering, no vested interest - genuinely worried that some people are going to get burned. Met a new guy at work today who'd just bought himself a shiny new inner city apartment......

    Still even if things are as you described, the unemployment rate when inpex leaves will be around 7 (ish) percent, and that's not counting all the indirect jobs tied to the inpex workers.

    Lots of other things in Darwin and it will be good again one day. Short to medium term remain uber risky.
     
  8. MACC

    MACC Member

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    Slow down Hammer...dont get to carried away mate, promote the good not the bad - thats what the media's for. Darwin has - Government (Healthcare, infrastructure, Community-based work), Defence, Mining, Tourism, Residential/Commercial construction. Yes INPEX is a big employer but as #Gabba has stated not everyone out here is Darwin based...Many are FIFO so will not affect employment statistic's directly once they finish. Check out the ICN website (industry capability network) this lists the current projects, plus those that are proposed or planned. I agree Darwin has seen better days and will see these days again but its definitely not the beginning of the end.
     
  9. Gabba

    Gabba Member

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    It is always good to see people looking out for others.
    I too have no interests or real interest in Darwin as such. The rent that locals were telling me they were are paying seemed huge for the place. But it did seem likely to me at the time be short lived.
    A major project will do that, but in this case (the completion) it's unlikely to have as significant effect as Gladi based soley on the numbers and percentages that actually lived local as opposed to the workforce villages.
    To gauge this is why I asked about other industry and wouldn't mind knowing if development has been as rampant as Gladstone was in it's heyday?
    Will the increase in US forces for example provide a boost?
    This sort of info will give an insight as to whether a crash is likley or maybe it will be a lesser slowdown.
     
  10. MACC

    MACC Member

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    Agreed and i do have an interest in Darwin given that i own a property here. The community on PC is a very good one generally. Yes, the local army barracks has planned for another 840 housing lots to deal with the potential for 20,000 US troops - this would obviously be significant in terms of economic benefit. Currently we have 3 Projects of significance outside of INPEX - The Gateway shopping center, Tiger Brennan Roading upgrade (which is near completion) and the Palmerston Private Hospital. Darwin does have good rental returns and i believe it has for sometime now - We also have the second highest average income second only to Canberra which contributes to the high price of property in Darwin.
     
  11. hammer

    hammer Well-Known Member

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    You're right on everything here.

    But even then I dunno. The warning light is still on.

    That high average wage.... You don't reckon inpex has something to do with it?

    Even if my initial projections are wrong as @Gabba pointed out...we're still looking at 2-3 thousand people either leaving their rental properties or staying on looking for work.

    There are currently 1100 properties vacant across Darwin, and that's with all of the good stuff going on as you mentioned.

    Maybe I'm getting carried away? I do truly love this town. Maybe that's why I'm so passionate about this stuff....

    @MACC would you consider buying in Darwin before inpex finishes?
     
  12. Cards

    Cards Member

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    Warning or Opportunity?

    A huge majority of INPEX workers “reside” at the propose built 3500 man manigurr-ma village built at Howard springs or 750 man village at Bladin point with the rest in hotels & fully serviced apartments. These are FIFO & shouldn't be incorporated into Darwin’s permanent population – Jobs will disappear along with the workers so statistically the unemployment percentage wouldn't be correct.

    If the investor took a “punt” on the Darwin market in the hope of making the same “short term” gains made during INPEX construction over the “long term” then more fool them, because they didn't do their due diligence. Maximum capacity at construction stage was never going to last forever, just look at the previous Conoco construction phase in Darwin - But did Darwin die in the arse after Conoco Phillips – No.

    Massive growth “Bubbles” are always unsustainable & the key is knowing when to get in & when to get out if you’re in the business of flipping – If you’re not, Bubbles are called “White Noise”.
    If “White Noise” occurs at an area near you :) then it “could” be a perfect time to capitalise (sell or release equity) in the hope of purchasing more appreciating assets depending on your strategy.
    Retaining mass FIFO workers will be a challenging for the NT government & over supply/correction will continue in the market place.

    I prefer to look at the big picture rather than on a micro level, otherwise I suffer from analysis paralysis o_O

    Property investing is “long term” for me & as long as we have our current monetary system in place in terms of “Fiat Inflation” you will always make money IMO.

    I believe you can make money in “ANY” market If you purchases a good property in a good location at the right price – Although there are opportunity cost with every decision you make & we don’t have a crystal ball :(
     
    Last edited: 24th Mar, 2016
    hammer likes this.
  13. MACC

    MACC Member

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    Personally no, we are looking to move in around 2 years so we are once again saving with the plan to buy elsewhere. We will hold onto our property here. I have faith and i believe it is supported by the fundamentals that Darwin maintains. Population, multiple sectors to the economy, Capital city and planned investments. Imagine how mental this place will go if INPEX builds the additional 2 trains that have been designed to fit onto this site, and Conoco Phillips with the additional Train that they approved construction on last year before the price of Oil went tits up. That on the back of the port development would be huge. Obviously these are all if, buts and maybes but i think if Darwin were to go completely down the Drain alot of Australia would be heading that way aswell. My thoughts only
     
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  14. tapouttim

    tapouttim Member

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    I think the main problem that Darwin is suffering from is that it has a traditionally transient population in a low supply housing environment . Rental demand has been high and the income has been there to support the higher yields. Supply has been has been on the increase for a number of years and has now surpassed demand.
    Todays renters are very aware of this and are prepared to move to take advantage of falling rents.
    There is still more stock to come on to the market so there are probably better places to have your money at the moment. Having said that there could be opportunities for some if others want to or have to get out of the market.
    At fifty i would rather put my borrowing capacity some where with an upside in a shorter time frame.