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Darwin's housing boom fades
Jo-ann Hodgson investigates why Darwin’s property price growth is beginning to pull back after 2006’s peak.
Darwin's median property price has been falling from its peak of June 2006 due to issues of affordability and oversupply.
Although property prices are expected to grow in Brisbane, Melbourne, Adelaide and Canberra in 2008, price growth in Darwin, as well as in Perth, are likely to pull back, according to economic forecaster BIS Shrapnel.
Darwin's median house price increased by 25 per cent in 2005/06, with total growth of 70 per cent over the three years to June 2006. This growth in the Northern Territory can mainly be accredited to the effect of the resource boom and strong employment growth. "The cities of Perth and Darwin have experienced solid price growth, as residential prices continue to be underpinned by stronger demand generated by a booming resources driven economy," the PMI Residential Property Overview reported at the time. However, in contrast to these boom years, house prices in Darwin increased by only 9 per cent in 2006/07 and are forecast to grow by just 3 per cent over the years to 2010. "Darwin unit prices were soft in the June quarter, indicating a hard landing may be in store," reported the Australian Property Monitors.
Indeed, Darwin's median unit price fell 7 per cent in the June 2007 quarter, according to figures from the Real Estate Institute of Australia. The Australian Bureau of Statistics also recorded a 1.4 per cent decline in Darwin's house prices in the same quarter. This price growth slow-down is largely due to problems of affordability and over-supply. Darwin's median house price in June was around AUS$420.000 (Source: APM), more than that in Melbourne, Brisbane and Adelaide and properties in the city now take longer to sell than in any other Australian capital. Houses in Darwin typically take 11 weeks to sell and units nine weeks. "The market sectors that we are seeing struggle most are average houses in the northern suburbs and in Palmerston, while units of a generic nature (without a point of difference such as views) are also finding it tougher," Herron Todd White commented in its September Month in Review.
With more high-rise apartments currently under construction, this oversupply issue looks likely to be become ever more serious over the coming year. However, Darwin can still cling to the postives of low vacancies rates and high household incomes.
For more information:
PMI Group
APM
ReiAustralia
HTW
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