I was reading the July 8 market update from this site and noticed that Darwin's median house price was $530k. This is higher than all capital cities except Sydney and Canberra. They also have the highest yield of all cities.
Why is this so? Darwin doesn't naturally come to mind when I think of property. And why doesn't anyone on this site talk about Darwin? It just seems strange to me.
Regards,
Andrew
itsandrew
Go as far as you can see and you will see further.
Darwin has a high rental yield because of the large number of transient workers there. It also has a massive land and housing shortage.
Darwin never came to mind to me when I thought about property until I bought my first property up there in 2004, the day before the market boomed. We bought everything we could get our hands on up there. My husband and I quit our daytime jobs three years later.
Darwin? I can talk about Darwin until the cows come home. Love that city!!
K
wow linar i love stories like that
motivates me!! and also makes me frustrated that we arent ready to purchase again just yet! its so bitter sweet hahaI brought in Darwin 02, paid 227k, now 550k, rent is 550p/w, it was great then however has its growth peaked, who knows
Yields are not what they use to be as capital growth has outstripped rental growth.
Now it finding another opportunity
Have fun
Barry
The thing about Darwin is that traditionally it has been a risky market. When I bought in 04 the average yield was 10%. However, vacancy rates were always ridiculously high, I think as high as 20% at various times. This is why it was not considered a safe market to invest in.
However, over the last 8 or so years things have changed. There is a lot of work up there at the moment to the vacancy rates are now very low, perhaps even the lowest in the country. There is a desperate shortage of land so there is a premium on rents. For example, I had a block of flats in Stuart Park, the next suburb out of the CBD. They were pretty basic two bedroom, one bathroom units. When I sold them last year, they were each renting out for over $300pw.
When I started buying in Darwin, older style units were selling for about $70 – 80,000 and were renting out at about $150pw. Then the boom started and every property I owned doubled in value in two years, all the while being positively geared. I sold out of everything for several reasons. Those units are now worth about $300,000 each, although saying that, I have no regrets selling out when I did. The rental yield on those units is now about 5 – 6%.
While there is a resources boom in Australia, Darwin will continue to have a low vacancy rate. But because it is still a transient city (although not as much as it used to be) there will still be an element of risk, with potentially higher vacancy rates. While Darwin has become much more cosmopolitan in the last decade or so, it has several factors at play that the other capital cities don't have. Those factors make it a riskier investment proposition.
I don't have any property there any more. One of the reasons for that is that generally speaking, the rental yield is not much higher than that in other capital cities while there is still an element of risk in Darwin. I am now investing in Adelaide and very happy doing so.
I have a reasonable knowledge of the mechanics of Darwin investing so would be happy to discuss it further if anyone is interested.
Cheers
K
Yeh agree with the comments above. I purchased a PPOR in Howard Springs (about 30km south – 5 acres and house) in 2003 which is now an IP. has increased in price by nearly 300% in that time which has been great. The prices really took off in 2004 with continued growth each year thereafter.
I note that prices have not moved too much in the last 12 months and forecasts for possibly stagnant growth in the short term. There is planning to build another LNG plant which will be another huge infrastructure project that should see a return to growth. Darwin is continually growing. I visit every six months and continue to see the results of this growth with every visit.
Whilst Darwin has been good for me, the prices are a too high at the moment to consider buying again. I have read some reports indicating townhouses or older homes in Grey, Palmerston could be good buys with god growth potential but as long as you get the right tenants.
motivates me!! and also makes me frustrated that we arent ready to purchase again just yet! its so bitter sweet haha
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