New government initiatives in two Australian cities are expected to create thousands of new jobs and in turn change the fortunes of the cities’ real estate markets.
According to general manager of Raine & Horne Darwin, Glen Grantham, the political and bureaucratic landscape is likely to have a big impact on Darwin’s property market in the second half of 2016, following the announcement of the July federal election and the Northern Territory poll in August.
“There is a lot of talk about an onshore gas project that would bring 6,500 people to the territory for work, and this would quickly help snaffle up the large number of properties that are on the market for sale in Darwin,” he said.
“Getting on with the gas project would have a similar impact on the Darwin market as the recent announcement by the federal government to spend $50 billion on building 12 Shortfin Barracuda submarines will have in Adelaide.”
The Barracuda initiative is expected to create almost 3,000 new jobs in South Australia.
“A significant project similar to the submarine contract in Adelaide would also get the Darwin market back on track very quickly, thanks to the extra jobs and money it would inject into the economy,” Mr Grantham said.
“The Darwin market is very small compared to the bigger east-coast markets, and infrastructure announcements can turn it around very quickly.”
Mr Grantham said there was an influx of younger professionals into Darwin several years ago, when the Inpex project was announced.
“They want to be close to the city’s entertainment delights,” he said.
“Therefore, you don’t have to be a rocket scientist to see that buying and renting close to the CBD will prove very attractive once workers earning good salaries start returning to Darwin, and this will underpin capital values in these property markets.”
According to Mr Grantham, Darwin’s property market would also improve if the federal debate about the benefits of negative gearing were discontinued.
“The Darwin market is very dependent on investor capital, so I’d like to see both parties commit to leaving negative gearing alone long-term and look to other measures to solve the budget deficit,” he said.
“If we can get some consensus from the political parties on issues such as onshore mining and negative gearing, the Darwin property market will be better placed to turn quickly, and owners will enjoy some excellent growth.”