Investors pounce on Darwin’s cheap homes and high yields

Derek Hart of Elders Top End Group said investor enquiry in the Darwin market began picking up about four months ago with strong interest in houses below $510,000, but has accelerated in the past few weeks..

“For the last six years there hasn’t been much investor activity and about 95 per cent of our buyers were owner occupiers,” he said. “Now it’s 60% owner occupiers and 40% investors. They’ve been coming in heavy in the last six weeks”

Mr Hart said building inspectors, pest inspectors and conveyancers were all “flat out” now, with most calls coming from buyers agents for southern investors.

Mr Hart said about 85% of the investors Elders Top End was seeing were from down south and about 80 per cent were using buyer’s agents.

“Enquiries have gone up 50% in the last month, more people are looking and we’re getting more offers,” he said. “Properties are selling quicker for that reason.”

“There’s definitely an increase in transactions happening,” he said.

Daniel Harris of Real Estate Central said his agency was seeing a similar trend with a 30% spike in sales in the past eight weeks.

“Over 90 per cent of our buyers in recent years have been owner occupiers but that’s been flipped on its head,” he said.

“We’re seeing a 50/50 ratio of owner occupier to investor in the past couple of months.

“At least a third of our deals are off market and a lot of these transactions are through professional buyer’s agents.”

PropTrack data showed preliminary sales in Darwin were up 15% in September compared to 12 months ago.

Mr Harris said this data didn’t tell the whole story of what was happening at the coal face in the Darwin real estate sector with figures skewed due to off market sales and the lag caused by settlement times.

He said a number of factors were contributing to the uptick in real estate activity in Darwin.

“Some people are saying the change in government is driving consumer confidence, some are saying it’s the new grants, while some are saying it’s gas or defence projects,” Mr Harris said.

This four-bedroom Muirhead house is currently on the market and open to offers over $745,000. Picture: realestate.com.au

“I think that’s all playing a role, however the main thing driving (increased interest in Darwin real estate) is that Darwin has become so much cheaper than other capital cities in the country and the yields on offer are so much higher.

“Every other capital has had their run.

“Investors moved from Brisbane and Adelaide, then Perth was the recent flavour and now it seems it’s Darwin’s turn.”

Mr Harris said the vast majority of investors were hunting for entry level houses below the $550,000 mark.

“Darwin is the only capital city where you can still consistently find houses under $500,000 within 25km of the CBD,” he said.

PropTrack data showed the median home price in Darwin was at $511,000 in September with no growth for the month and a slight increase of 0.94 per cent in the 12 months to the end of September.

Mr Hart said he also believed a number of factors were behind the awakening Darwin property market, including the new CLP government and the new first homeowner and new build grants.

This five-bedroom house in Gunn is currently on the market accepting offers over $598,000. Picture: realestate.com.au

“People have confidence that with the new government in place crime will get fixed,” he said.

“It’s great timing with confidence that interest rate will drop and new projects signed off for next year.”

Mr Hart said the tight rental market was also piquing investor interest.

“Will vacancy rates stay low? Absolutely,” he said.

“Investors can see this trend continuing.”

PropTrack data showed the Darwin rental vacancy was at 1.21% in September, down 0.76 percentage points year-on-year.

New rental listings in Darwin shot up 18.2% in the year to September however total listings were only 1% higher annually with supply sitting 36.2%below the decade average.

This article first appeared on realestate.com.au and has been republished with permission.