Darwin’s property market will continue to see strong economic growth, fuelled by a different resources sector, according to a property expert group.
With many mining projects nearing completion in Western Australia and the Northern Territory, James Spencer, market analyst at Propell National Valuers, told Smart Property Investment that the growth would be driven by a number of gas projects.
“Mining growth has decreased but the growth of gas projects like lchthys will continue to drive the economy,” Mr Spencer said. “I don’t think the growth is going to slow down any time soon.
“The reason why WA and NT have performed well over the last few years is obviously the mining, but as the mining boom starts to cool, it may affect WA’s growth, however, NT will continue to grow with plenty of gas projects that could potentially rival past mining projects.”
The $34 billion lchthys liquefied natural gas (LNG) project, which will see gas pumped 889km from WA to Darwin for processing, is not only expected to drive the local economy, but also national economic growth.
The project will require 2,700 workers at the peak of the construction, and facilitate 300 ongoing jobs once the project is operational.
LJ Hooker Darwin’s Robert Higgins said the LNG project is already having an effect on population growth, and with the main workforce expected to arrive this April, the numbers will continue to rise.
“The workers’ village will handle a large number of these workers, however, companies have already secured hundreds of leases on units in the city to house their white collar workers for the next three years at least,” Mr Higgins said.
“There is a flurry of projects in the planning stages and early construction stages to try and soak up some of the demand. However, at this stage, it looks like there will still be a shortfall, which will continue to drive rents and property prices up.”
In addition to these indicators, Mr Spencer points to other signs underpinning growth in Darwin.
“Many factors like low unemployment, high wages growth and strong population growth are statistical signs that Darwin’s economy is booming, as are a number of gas projects that will pump more money into Darwin’s economy,” he said.
“Investments are an attractive option on the whole at the moment. Darwin has quality employment levels and infrastructure, and great future economic growth.”
However, as supply cannot keep pace with demand, Darwin continues to be one of the most unaffordable places to live in, Mr Spencer continued.
“Darwin is severely undersupplied, the government has made efforts to free up more land for construction, bit it can’t keep up with demand and therefore the rents keep going up.”
Despite this, Mr Higgins warned that affordability is subjective as wages are higher in the area, making the higher cost of living “relatively easy to deal with” compared to southern states.
Compared to 2010-2011, Mr Higgins said 2012 saw property prices begin to rise again, with “a good number of property transactions in the low to upper-middle price ranges.”
According to the latest figures from RP Data-Rismark Home Value Index, Darwin was the best performing capital city with dwelling prices increasing 2.5 per cent over the quarter ending December. Median house price currently sits at $550,000 and the median unit price at $419,000.
While Darwin's property market fell by 2.5 per cent over the month, Mr Higgins predicted that this number will return to “a gain” early this year as people return to work from their holidays and the transactions “start rolling over again.”