The start of the year was quiet for investors in Darwin‘s housing market. Will this continue for the rest of the year?
Jeremy Callan, property valuer at Herron Todd White, said investor activity appears to be stagnant compared to the owner-occupier segment.
“We are seeing tenanted sales results in the dwelling segment continue to be low as owner-occupiers dominate both dwelling and unit markets,” he said.
In fact, while the start of 2021 for Darwin has continued the recent uplift in demand and conditions experienced in the latter half of 2020, the majority of this recent improvement has been driven by first-homeowners looking to access strong government incentives.
However, demand for rentals has begun to surge, as indicated by the recent arrivals to the city. Most suburbs are starting to increases in median rents.
“These increases in rents combined with a sharpening vacancy rate are key factors we believe will see some return to the investor market,” Callan said.
For instance, four-bedroom dwellings in Palmerston have recorded a 13.2% increase in median weekly rental rate to $600. The current median house price in the market sits at $465,000. This makes a return of over 5% possible.
“We can see investors being able to achieve these returns for the remainder of 2021 and believe this will draw investors back to the Darwin market,” Callan said.
The unit market is expected to follow the same pattern. Unit rental rates in Palmerston have also shown a good increase with the three-bedroom unit median weekly rent sitting at $430.
Overall, Callan said the outlook for Darwin is positive, a stark contrast from the same time last year. However, while the government incentives have boosted the sentiment in the housing market, it remains to be seen how the market will be impacted once these support schemes end.
“The fundamental pieces for an economic recovery have not changed. If no major projects get off the ground and there are no further employment opportunities, we may see many of the new arrivals to Darwin head back down south,” Callan said. “This issue will remain for 2021 however with now historically low interest rates and a current strong return on both dwellings and units, we anticipate a steady return back to the market in Darwin for investors.”
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