Industry voices in the Northern Territory are concerned about exacerbating pressures on the rental market.
Quentin Kilian, CEO of the Real Estate Institute of the Northern Territory (REINT), warned of the stress the rental market is under, with vacancy rates at an all-time low and a combination of factors impeding the conversion of renters into buyers.
Mr Kilian noted that though vacancy rates eased across Greater Darwin this quarter, pushing out by 0.4 per cent, the market remained tight across the region.
“At just 1.9 per cent vacancy rate in Darwin and Palmerston, 1.5 per cent in Alice Springs, and just 1 per cent in Katherine, this still points to very limited supply in the market,” Mr Kilian said. “In fact, Katherine recorded a vacancy rate of just 0.5 per cent in its house market, and Darwin’s rural area had a 0 per cent vacancy in units.”
Rental prices have responded as expected, with the median rent in Greater Darwin for a benchmark three-bedroom house rising by 6.4 per cent to $588.50 per week. In the unit market, prices climbed as well, with the median rent for a benchmark two-bedroom unit moving up by 3.7 per cent to $423.00 per week.
Impacting the rental market are the similar supply issues on the sales side. With limited offerings, prices are pushing upward, restricting movement in the first-time owner category.
“We continue to be concerned that the Territory government remains stubbornly opposed to reintroducing concessions for first home buyers. As stock levels continue to drop and prices rise, added to the new borrowing rules imposed last month, this will start to push the purchasing ability – without some form of assistance – beyond the capacity of many first home buyers,” Mr Kilian warned.
“This will mean they will remain in the rental market, which is already under stress, or seek opportunities elsewhere.”
Without government concessions for first home buyers, the industry is relying on investor activity as well as supply continuing to expand on the not insignificant gains it made this quarter, hopefully levelling prices.
“The housing market continues to remain strong across the Territory, and while the median dropped in Greater Darwin very slightly, it sits at $575,500,” Mr Kilian said.
Palmerston reported the strongest sales numbers this quarter with 168 properties sold – a lift of 7 per cent for the quarter and up 84 per cent on last year. Inner Darwin’s figures also recorded a noted increase of 27.8 per cent for the quarter, which comes in at 109 per cent higher than last year. Inner Darwin was also the only jurisdiction in the Northern Territory to record a lift this quarter in median price, up nearly 12 per cent.
Alice Springs saw sales volumes rise by 21 per cent this quarter for a median price of $485,000, while both Katherine and Tennant Creek recorded good sales and reductions in median price.
According to Mr Kilian, the standout this quarter was sales in the multi-dwelling market across Greater Darwin, continuing on from a strong previous quarter. The number of properties sold jumped 37 per cent, which is up 89 per cent from last year, with 331 properties finding new owners.
Increased supply and levelling prices should continue to attract investors, who have already noted that yields in Darwin remain stronger than in all other capital cities.
Average house yields in the capital currently sit at 5.3 per cent, with units slightly above that at 5.6 per cent. In other markets, they’re even higher. “Alice Springs offers investors fabulous yields with houses there at 6.1 per cent and units at 6.7 per cent,” Mr Kilian noted.
“Investors have become more interested in the Territory over recent months, mainly due to the strong yields on offer, and that should bring more stock back into the rental market.”
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.