Despite the government's plan to inject 2,000 affordable homes into the Territory, rents are expected to stay strong, according to a property expert.
David Tollner, the minister for housing said, while 1,700 homes need to be built in the Territory each year, currently only 1,200 homes are built.
The government plans to deliver the affordable housing over the next four years, and will hold a 10-year head lease over new dwellings, which will be rented to skilled workers for 30 per cent below the median rent.
Sites in Palmerston, Katherine, Tennant Creek and Alice Springs have been identified as areas suitable for the redevelopment.
“Real Housing for Growth’s target of 500 affordable dwellings per year helps bridge that shortfall,” Mr Tollner said.
“Key workers include teachers, nurses, health workers, hospitality staff and young families struggling to find affordable private rents and who are not eligible for public housing.”
However, National Property Buyers’ Catherine Cashmore told Smart Property Investment that this amount is nowhere near enough, and is unlikely to lower the rental prices in the Territory.
“The Northern Territory has had years of under-building because they have put restrictions on subdivisions of land. They are principally a low-rise city, so they haven’t built a lot of unit developments like we’ve seen in Melbourne and Sydney,” Ms Cashmore said.
Rents in the Northern Territory are among the highest in the country, and the government’s plan to subsidise rent will not ease the problem.
“Whenever you subsidise rent, you don’t actually lower rental prices,” she said. “It keeps prices artificially high.”
The only way to rectify the problem is to build a lot more accommodation under a growth plan, Ms Cashmore explained. Moreover, it has to be accommodation that is affordable for homebuyers, not just sold to investors who would rent it to high income owners such as FIFO workers.
“What they need for the Northern Territory to flourish is for people to go there to build families and businesses, and the government must have that as a priority,” she said.
Investors looking for capital growth must also look at the long-term prospects of the Territory and not just at the artificially inflated yields.
“Investors need to understand what they want to achieve in five to seven years,” Ms Cashmore said.
“The only way that they’re going to get consistent capital growth is through buying properties that suit homebuyers, because that’s the core market. You [have to] buy properties that are always going to be in demand.”
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