State of Markets - NT January 2015

Glenn Grantham, general manager of Raine & Horne Darwin, says that impressive median price growth in Darwin is the result of new developments and purchases made off-the-plan. Many such apartments that settled recently were obtained 12, 18 or even 36 months ago, and may not necessarily reflect the current market, especially for established stock. There have been around 200 new apartments settled in the past few months.

In November 2014, the NT Government removed building height restrictions in the central district. However, this decision is contingent on agreement from Defence and the Civil Aviation Authority. Herron Todd White states that this will lead to further consolidation of small sites within the CBD. The property group says the aim of this legislation is to create a big enough footprint to capitalise on the air space available to developers.

Over the past few months, there have been a number of sales of CBD sites in Darwin. These will be developed with residential units, as the Darwin CBD office market is enduring a difficult period, according to Herron Todd White.

Even in Darwin’s core CBD district, there has been a prevailing focus on residential unit developments, with the exception of ground floor retail and commercial components, the company says.

In the current economic, political and town-planning environments, the property group expects this trend to be maintained in the medium term. The group also connects the NT’s future property market growth with infrastructure and employment projects.

In focus: Fannie Bay

Fannie Bay has a tropical atmosphere and is located only a few kilometres from Darwin’s CBD. Although Fannie Beach is fairly small, it is well maintained and remains a popular location throughout the year.

I feel that much of Fannie Bay's community spirit comes from social interactions on the beachfront and at the well-established sailing and triathlon clubs.

The entire Fannie Bay market has long recorded steady growth. Three- to four-bedroom family homes are consistently strong performers and have experienced around 5.5 per cent value growth over the past year. Given the area’s unique positioning between the beach and CBD, we find that property is usually held for a long time.

The rental market, like the rest of Darwin, is very strong. However, there tend to be a lot more owner- occupiers in Fannie Bay, so properties that do come up for rent are well sought-after. Weekly rents for one of the area’s four-bedroom properties is $1,000 or more, so the tenants are often families with children or city professionals who want easy access to the CBD.

While investors looking to live in their property should not experience any difficulties in Fannie Bay, I feel that those looking to rent out a property would have a challenge on their hands. Despite having a low vacancy rate, many of Fannie Bay's properties are older and subsequently require a lot of renovation and maintenance.

For example, tenants are less likely to help you maintain a standard Fannie Bay garden, which is usually around 1,000 square metres in size. Investors should also take Darwin’s recent construction in the CBD and land releases into account, as this new stock looks set to make the rental market more competitive.

However, there are some townhouses close to the beach that have delivered good rental yield and value growth. Although the area already has a large stock of block dwellings and medium-density housing, we are starting to see some larger townhouses being built, which are going from anywhere between $950,000 to $1,200,000.

These properties have performed well because of their close proximity to social amenities. Fannie Bay deserves to be a prestige suburb, and I think it will go from strength to strength in years to come.

Fast 5 hotspots

Farrar

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Fannie Bay