Darwin - a bubble set to pop?

Hi
The well known Michael Yardney has said in his latest newsletter: "In fact I think Darwin represents a bit of a property bubble for Australia and is probably at around the same stage that Perth was about two years ago.... In fact I would caution that Darwin property values will drop as we head into 2010, just as we saw occur in Perth two years ago and Sydney six years ago".

I have a 3 bed appt in Darwin bought in Nov 2005 - going by the above, now is a good time to sell it... what do you think?

I paid 460K in Nov 2005, one agent says it's worth 520K now, another agent says its worth 550-570K (such discrepancy being another issue I am trying to work out right now!)

Any genuine advice highly appreciated!

Thanks.
 
Why don't you have your cake and eat it too?

Keep the IP in Darwin, it has done well. What if it continues to grow? (as it should over the next 10 years anyway).

If you want to buy another, just use this IP to refinance some of the equity out of it in cash to use as a deposit on the next one.
 
Hi Tax-Man

I live and invest in Darwin and I do not agree with M. Yardneys summation (I have not read his article yet) that you quoted him as saying. The way I see it is that our population is growing and there are a number of large infrastructure projects in the offing that will conyinue to put pressure on the housing market in the forseeable future. The rental vacancy factor currently and over the last few years has been under 1% and not showing signs of easing. In fact the rental situation at crisis level if you read the local NT News. Over the last several years cap growth has averaged over 13% pa so the figures you were quoted by agents seem a bit low considering when the property was purchased. If you need any more info I would be pleased to help. Not sure how its done, but I believe you can email me direct?? I would not sell.:)
 
Residex best rent reports predict houses in 3 suburbs in Darwin (Gunn, Bakewell and Durack) will have 10% pa growth for next 5 years and rental yields over 5.5%.

I bought in Gunn 4 years ago based on a similar residex report that was saying 16% pa growth for next 5 years. It has pretty much done this for the last 4 years.

I wouldn't sell. I'd retain for the rent. Large infrastructure projects and limited available land (unbelievable but true) should see prices continue to grow. If residex is half correct that is still ok growth.
 
With all due respect to Mr. Yardney, Micheal has ALWAYS thought low of Darwin, and he has so far (for many years now) been completely off the mark and not much that comes from his mouth on the NT could be further from the truth so stew on that for a minute and tell me you're still considering selling.

I think Micheal is great, and I enjoy reading his articles but he really should stop advising people to be fearful of Darwin, its been steaming along for many, many years now and will not stop any time in the short to medium term in my opinion. Theres way too much happening there.
 
yeah he bags Perth too, but he is a melbourne spruiker so it would be silly to promote perth and darwin whilst bagging melbourne!

having said that, if your honest assessment is that choppy waters may lie ahead, be sure to check your servicing and over all structure. If your funds could be used better elsewhere then get out. I know far too many people - many on this forum - that got far too sucked into the BnHnDie mantra.
 
The NT economy isn't a real one in that is basically dependent on the largesse of the Federal Govt. To that extent property prices are driven and supported by the ongoing willingness of the Feds to continue to kick in at the rates they have historically, they are susceptible to changes in policy to a greater extent than those in other parts of Australia.
 
We visited Darwin for the first time earlier this year and were impressed with the activity and "buzz" of the place. Another point often forgotten is that properties in Darwin have to be built to high cyclone standards which increases the cost considerably. Friends built a home in north Qld and were shocked at how much extra the cyclone-mitigation features added to the price.
Marg
 
The NT economy isn't a real one in that is basically dependent on the largesse of the Federal Govt. To that extent property prices are driven and supported by the ongoing willingness of the Feds to continue to kick in at the rates they have historically, they are susceptible to changes in policy to a greater extent than those in other parts of Australia.

What you say TF was certainly the case in the past re the Fed Govt. But not any more. Population is growing rapidly courtesy of expansion in military presence, industry, mining and especially gas production offshore, which is treated in and shipped from Darwin. Darwin is rapidly becoming a regional hub which includes SE Asia. I would doubt whether the average resi investor would find a more conducive investment climate anywhere else in OZ. :)
 
I have been to Darwin a couple of times in the last year and l think the place has a hell of a lot going for it.
The amount of new businesses moving into the Territory is amazing. Big $$$s
A great place to warm the bones and the wallet.:)
cheers
yadreamin
 
for federal funding wise, darwin will always be the poorest brother in the country. so, there is always plenty of 'pity money' poured there... that's how i look at it anyway when i worked there. may not be that anymore with the oil and gas and uranium mining boom.

there is also the attraction to fly to asia for a holiday... i rem flying to singapore with a few mates over the weekend for 'yum cha' & back for $300 RETURN!!!!!!
 
What you say TF was certainly the case in the past re the Fed Govt. But not any more. Population is growing rapidly courtesy of expansion in military presence, industry, mining and especially gas production offshore, which is treated in and shipped from Darwin. Darwin is rapidly becoming a regional hub which includes SE Asia. I would doubt whether the average resi investor would find a more conducive investment climate anywhere else in OZ. :)

Not saying it isn't an investment opportunity.

Just pointing out it is a company town and that company is the Federal Govt.
 
Darwin has been a great place to invest.
I've just discovered that holdings there have just gone up (within the last two months) by around $40,000 each for houses, and around $20-30,000 for units (generally speaking). Not bad.

I was looking to purchase another a few months ago, but was put off by the prices and decided to look elsewhere. Looking back, this was a tainted decision and I was thinking about this just this morning, I think Darwin still has a long way to go.

A friend of mine who was looking at relocating and selling up was called yesterday by an agent who had just sold an address on the same street (took 2 days to sell..)
The agent was wanting to know if he'd like to put the house on the market because they're short of stock. If you're looking to buy something in Darwin don't expect to pick up a bargain.

So I don't see a Perth style housing bubble here purely because we don't have the stock,
Every day I hear the same old thing on the radio, "house prices are ridiculous, what can we do to stop it?" Mind you, I was hearing that when prices were half what they are now.. which wasn't high, or over inflated, I still don't believe they are. Supply and demand rules.
 
Actually a cyclone would really send prices sky high. We had paid around $2000 for a block before Tracy came along. A few months after Tracy we sold it for $8000 but if we had waited a little longer we could have probably got up to $20,000 for it.

We were back in Darwin recently and the place is really booming and I don’t think it is just a property boom. Defence has to increase, business looks good and of course there is gas. The population is increasing and the pay is good.

However Darwin is a different market than other capital cities. The capital growth comes in spurts and once it slows it can remain slow for quite a few years so the average growth may not be as impressive as you might expect from today’s market . We have a house that is now showing an average of almost 9% growth after 15 years but it takes patience.
 
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