Research

State of Markets - NT February 2015

By Reporter

Moving into 2015, Darwin’s recovery may hinge on the tourism sector

 

In the year leading up to December, Darwin recorded growth of 1.6 per cent, according to CoreLogic RP Data.

This figure leaves the Northern Territory some way behind the annual capital city average of 7.9 per cent.

Darwin also performed poorly in the final quarter of 2014, with home values decreasing by 1.7 per cent.

SQM Research property analyst Louis Christopher expects that Darwin’s slow growth will continue into 2015. He identifies Darwin as the weakest capital city market, citing climbing vacancy rates as a particular problem.

Mr Christopher describes Darwin as a classic example of a ‘shallow’ housing market, explaining the market’s minimal volume and depth causes prices to rapidly swing one way or the other.

Moving into 2015, prices are swinging south, he says, primarily due to the commodities downturn – which shows no sign of stopping any time soon.

However, Raine & Horne believes that a recovery in the tourism sector would prompt interstate investors to return to the Northern Territory city.

Glenn Grantham, general manager of Raine & Horne Darwin, explains that a few years ago, interstate buyers totally dominated the Darwin investment property market.

While these buyers now represent just five per cent of the investment market, Mr Grantham expects this will change as a result of improved interstate tourist numbers.

According to figures released by Tourism Research Australia’s National Visitor Survey, there was a 14 per cent increase in total domestic visitors to the Northern Territory for the year to September 2014, compared to the previous year.

Mr Grantham says that these are the Northern Territory’s best visitor numbers in five years, and with a strong correlation between tourism and interstate property investors, he’s expecting the Darwin market to surge in the second quarter of 2015.

Moreover, Mr Grantham believes that the provision of a $26,000 grant for first home buyers to purchase a house and land package from 1 January 2015 will have wide-ranging implications for Darwin real estate.

In focus

Johnston is a suburb in the city of Palmerston, located close to Darwin harbour.

The area’s tropical climate has encouraged the growth of water‑based leisure activities in recent years.

The well-established fishing charters at the nearby beaches run expeditions all year round and are in very high demand.

Residents can also spend days in the sun at the nearby Palmerston Water Park.

We’ve seen steady investor activity in Johnston over 2014 and expect this trend to continue into 2015.

However, investors looking at the area should expect to pay a premium price for land. Well-sized plots, depending on the part of Johnston they are in, cost anywhere between $200,000 to $300,000.

To give investors an idea of the area’s land value, a four-bedroom house will usually cost around $350,000 to $400,000.

A brand new four-bedroom house and land package will cost around $550,000 to $600,000. 

Although Johnston’s rental market is not as strong as it was 12 months ago, I feel that the entire Northern Territory rental market was inflated during this time. Rents seem to be coming back down to a more sustainable level, and yet are still at a much higher level than most other states.

I think that a conservative softening of the rental market now, as opposed to a drastic drop in rents in the future, will be good for the area in the long run.

Because there is currently a unit oversupply problem across large parts of the Northern Territory, I would advise investors to steer clear of this type of property.

A significant proportion of Johnston’s units were built with unrealistic capital growth and rental yield expectations.

For this reason, I feel that a house and land package would be the right way to go. If an investor was to rent out a house and land package, this type of property is more likely to attract long‑term occupiers. 

In 2015, I feel we will see a plateau in the market both in Johnston and the wider Northern Territory.

Growth figures have consistently been in the double digits over the past few years, and this trend simply can’t go on for ever. However, moving forward five to 10 years, I feel that the landscape of Darwin and surrounding areas will be unrecognisable.

The local economy is very versatile and has enabled the area to become the gateway to Asia. Perhaps more importantly, a lot of Asian countries see the Northern Territory as the gateway to Australia. This perspective could be the key to the state’s future success.

Fast 5 Hotspots

Farrar

Johnston

East side

Larrakeyah

Tennant Creek

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  ["title"]=>
  string(51) "Boost for investors as app sets up off-site bidding"
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  string(55) "boost-for-investors-as-new-app-sets-up-off-site-bidding"
  ["introtext"]=>
  string(144) "

Property investors are now able to identify and bid on auctions remotely using a new live-streaming functionality launched by Gavl.

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Called “Request an Auction”, the new functionality enables users to watch and bid on any Sydney or Melbourne auction remotely.

Through Gavl, prospective buyers are now able to register to bid on their preferred auction. The platform will obtain permission from the listing agent and confirm within 48 hours.

Vendors can also request to have their auctions broadcast to a larger buyer audience.

Co-founder Joel Smith said that auctions streamed on Gavl attract 47 per cent more viewers than traditional ones.

He said that Request an Auction will be valuable for remote buyers.

“Buyers are able to have Gavl attend any auction they nominate, so they will never have to miss out on an opportunity due to logistical complications in physically attending the auction.

“Vendors, too, have the opportunity to directly book an auction with us, so they can open up their event to buyers all around the world. With more potential buyers, they’re giving their property the chance to receive more bids and maximise their sales result.”

Mr Smith said that prior to the Request an Auction app, buyers were limited to what they could achieve through the Gavl technology.

Gavl is a live-streaming and bidding platform for real estate auctions.

Mr Smith said that it has streamed more than 6,000 auctions, which have achieved 3.5 million views from 50 countries.

Gavl’s Request an Auction function is currently being offered in Melbourne and Sydney only.

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Boost for investors as app sets up off-site bidding
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Having to split her time between Hong Kong and her original base of Sydney has not slowed Julia Tita’s goal of building a high-performance Australian property portfolio. Instead the resulting alterations to her strategy have positively impacted her investing success.

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Having recently purchased her 6th property, Julia joins host Tim Neary to discuss her journey, share her ups and downs over the years, and reveal her thoughts on why some properties are better than others.

Julia also explains why she no longer makes a move without the help of a buyer’s agent, why working with a strong team of specialists is extremely important and discloses her long-term property ambitions.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

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AREAS MENTIONED:

Eagleby
Charters Towers
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Sydney
Orange
Melbourne 
Glen Iris
Bondi

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How a move to Hong Kong impacted Julia’s Australian property goals
object(stdClass)#1204 (52) {
  ["id"]=>
  string(5) "18159"
  ["title"]=>
  string(88) "‘Common’ referrer practice of being paid on both sides of the fence coming to an end"
  ["alias"]=>
  string(82) "common-referrer-practice-of-being-paid-on-both-sides-of-the-fence-coming-to-an-end"
  ["introtext"]=>
  string(246) "

The practice of property investment firms sharing undisclosed kickbacks among the supply chain involved in development sales will be outlawed in NSW on 1 July this year under the Real Estate Reform being handed down by regulators in NSW.

" ["fulltext"]=> string(2238) "

Property commentator and valuer, Suburbanite’s Anna Porter, said the reform will address conflicts of interest.

She said they arise when a mortgage broker, accountant or financial planner receives part of the commission from the property firm, who receive their fees from the developer or seller.

“This puts the broker into a position by which they are being paid on both sides of the fence,” she said.

“Until now this has been a grey area and there was nothing stopping this practice.” 

Ms Porter said this has been a common practice in the industry.

"Some well-known mortgage broking firms openly admit to receiving $5,000–$10,000 per referral in their pocket.”

She also said this process has been going on for decades.

"Property investment firms commonly pass some of their commission on to the mortgage broker, accountant or financial planner as a reward to them for passing on the referral. This means that many brokers or financial service providers are making significant amounts of money just to refer on to a property firm, often totalling hundreds of thousands of dollars a year," Anna Porter said.

Ms Porter said the Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 will be in force from July this year, and will prohibit this practice unless the broker or referring partner also holds a real estate industry license.

"Under the new laws, if the broker takes a referral fee from the property firm, they will have to be a licensed real estate agent and also hold a corporation’s license,” she said. 

“Subsequently, every transaction that they receive a referral fee from, they will be putting their license up against the transaction and taking full liability for the conduct, practices and outcome of that transaction, even if they have little to do with the transaction; they are a party to it financially and therefore take as much risk as everyone else in the transaction.”

Mr Porter said where a referrer holds a real estate license, and receives a part of the sale commission, they may find themselves in breach of the ethical requirements under the act.

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‘Common’ referrer practice of being paid on both sides of the fence coming to an end

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