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Northern Territory's poor economy continues to subdue the property market - RiskWise research
THE Northern Territory's poor economy continues to play a part in its subdued property market with 15.6 percent price reductions for houses in the past five years and a massive 29.4 percent for units.
According to the latest RiskWise Property Research Risks & Opportunities Report, much of the negative capital growth in recent years is due to population decreases following the end of the mining boom and lack of employment, leading to high interstate emigration.
RiskWise CEO Doron Peleg said the territory was the only state in Australia that experienced population loss in 2017-18.
“While dwelling supply in relation to population growth is low and dwellings are very affordable, the low demand for housing makes the Northern Territory a risky area especially given the low level of private investment that is significantly below the growth levels during the mining boom,” Mr Peleg said.
“According to CoreLogic, Darwin house prices peaked in 2014 and fell 15.6 percent over the past five years. However, improved housing affordability slightly reduces the risk associated with houses from medium-high to medium.”
He said it was likely houses in the Northern Territory would deliver poor or negative capital growth in the short to medium term.
However, as more than 67 percent of houses in the territory were owner-occupied and held for a long period of time, he said they carried a lower level of risk than units.
“Units carry a very high level of risk to deliver negative capital growth, due to the combination of oversupply, lending restrictions and low demand,” Mr Peleg said.
“The current supply of units, while not considered high in relation to population growth, still exceeds the low demand for them.
“This is particularly the case in areas with a high concentration of off-the-plan units, such as Darwin with 2034 units in the pipeline (10.2 percent increase to the current stock). They delivered -33.7 percent capital growth over the last five years.”
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