Sustained slump in two capitals
The prospect of a recovery in two of Australia’s suffering capital city markets is a distant one, according to a leading property commentator.
A real estate market data expert has speculated on the future outlook of the Perth and Darwin markets, stating that each is yet to experience the worst of their respective slumps.
CoreLogic RP Data’s head of research, Tim Lawless, provided the analysis in a video interview with Smart Property Investment’s sister publication, Real Estate Business.
Asked how long it would take for the Perth market to recover from its present slump, Mr Lawless said Australia’s fourth-largest city was set to experience at least another year of declining values before a turnaround.
“When you look at some of the dynamics in the Perth marketplace we’re seeing listing numbers rising, rents falling, yields falling, population growth has completely fallen off a cliff, the state economy is softening – so I can’t see any factors suggesting the Perth market is about to bottom out,” Mr Lawless said. “I think we will see a further fall in Perth values over the next financial year.”
It’s worse news for the Darwin market, with Mr Lawless explaining that a lack of infrastructure projects will limit the city’s recovery potential.
“Darwin is a marketplace that’s dictated by the level of infrastructure and population growth that’s happening, so we have seen some significant infrastructure developments and investment going on in Darwin over the past decade,” he said.
"We’ve seen a lot of natural gas facilities being constructed as well – the INPEX refinery is nearing its horizon for completion – but beyond that there doesn’t seem to be a great deal of new infrastructure on the cards for Darwin.”
The problems faced by investors in Darwin are compounded by the dramatic growth the city has experienced in the past decade – levels that are unlikely to be repeated.
“What we’ve seen is annual growth of around 7 per cent or so, which is the strongest of any capital city,” Mr Lawless said.
“That probably suggests that Darwin’s growth run has been very strong and it probably will take some time for that marketplace to move through its correction cycle then start to recover.”