Turning point for NT property market suggests a positive year ahead
2011 started quietly for the top end, carrying through from the constrained market of 2010. However with a last minute twist in September 2011, the market saw a substantial movement with investors and home buyers coming back into the market in sizable numbers. The December 2011 quarter saw a 22% increase in house sales across the Greater Darwin region, which equates to an additional $43 million in sales.
The key buying activity occurred prior to the announcement of the $35 billion INPEX LNG project in Darwin, however we do attribute a good deal of the buying activity to astute buyers who were ‘reading the tea leaves’ on the announcement. We also put a fair bit of the activity down to equally astute investors who were watching the market and decided that the bottom of the cycle had been reached.
Inner and outer suburbs reap the benefits
So which areas where driving the increase in sales? Based on December 2011 quarter data, the strongest performer has been Palmerston which saw a 45% jump in quarterly sales and was 53% stronger than the same time in the previous year. Inner Darwin saw a jump in house sales by 33% on the quarterly figures and was up by 18.5% on the same time last year.
On a suburb by suburb basis we saw very strong median price growth in the December 2011 quarter in Darwin City, up by 79% and Coconut Grove, up by 70.1%. Stuart Park offered up a 25.9% jump in media price as well. In Palmerston the strongest performances were in Marlow’s Lagoon with a jump in median price of 68.3% and Rosebery with a 16.5% median increase.
NT buyers buck the nation-wide downturn
While buyers in the Southern States twiddle their thumbs and wait for news of improved economic conditions to buy, home buyers in NT are out in full force.
The NT Government recently released figures from the Australian Bureau of Statistics which showed the number of Northern Territory housing finance commitments for owner occupation increased by 8.7% in December. This figure is significantly higher than the national average of 2.3%. They also pointed to a 12.3% increase in first home buyers in December 2011, which again compares to the national average of less than one per cent.
We anticipate that as the many infrastructure projects continue in the top end, we will see substantial population growth. This growth will take up existing stock that has been on the market throughout 2010-11 and will, in turn, begin to put pressure on pricing as the supply / demand equation swings to a higher demand than supply. There are a number of new residential developments coming to market in Murihead, Johnston Stage 2 and Zucolli, along with approximately 900 new blocks recently announced in Palmerston.
In addition the NT Government is moving to allow a greater level of densification to occur through changes to the zoning approvals that will allow suitable blocks down to 1000 sqm to be subdivided into two separate housing blocks.
We anticipate there will be a greater demand on units / townhouses in the inner Darwin area including surrounding suburbs such as Stuart Park, Parap, etc. There should also be a continued uptake of units and houses in the Palmerston area given its proximity to the building projects of INPEX and the on-shore oil & gas supply base. In 2013 we will see the arrival of some 2500 US Marines on a revolving deployment in Darwin. This will come with the added need of support persons ranging from people to cook, clean, fix vehicles and so on. As much of the Marine’s activity will be based around the Robertson Barracks we anticipate this will add to demand in the Palmerston area.
Another area to watch will be the semi-rural area of Coolalinga, which is located just south of Palmerston. This is a new growth area which will serve not only the fast growing rural zone but the overflow from the growth of Palmerston.