Australia's most tightly-held capital city – and it’s not Sydney or Melbourne
Darwin home owners are less likely to move than anyone else in Australia, with a new report revealing it is the most tightly-held capital city in the nation.
According to the Domain Tenure and Profit Report, released last week, owners hold onto their houses for a median period of 12 years and, for their units, 11 years.
By contrast, Sydneysiders have a median tenure of 10 years for houses and eight years for units. Home owners with property in regional Tasmania have the shortest tenure, moving on average after six years.
“Darwin is a little bit of a boom and bust kind of market,” says Chris Clarke of Real Estate Central NT. “We don’t have the guaranteed steady growth that other capital cities would have purely because of population, and we are, I guess, heavily project-driven.”
With a population of about 139,000, the small coastal city’s property market experienced a significant changafter Inpex – a gas project – arrived in town, bringing in a wave of new people wanting to buy homes.
“We saw a large influx of people from 2010 to 2016. Then the project finished, and our market took quite a large hit,” says Clarke.
Those who did buy during the boom, when the median house price peaked at $678,000 in December 2013, watched property values plunge to a median of $480,000 in September 2020.
“I imagine that people have been waiting for the market to recover to transact those properties because they would have been worth a lot more between 2010 and 2016,” he says.
Clarke says that different areas in Darwin have improved since then, but it is still cheaper to buy now – especially units – than it was during the Inpex period.
“Obviously, people buy and create property portfolios for long-term investment and profit, but we are seeing a number of properties, especially those purchased through that Inpex peak, are selling at a loss and quite a significant loss,” says Rachel Baldock of Elders Real Estate Darwin | Palmerston | Leanyer.
“They could continue to keep it for a raise slightly, but getting it back to the price they bought at may take quite a long period of time.”
Rick Triple of Knight Frank Northern Territory has had several clients who’ve held onto their properties for several years in hopes of earning some money back, but there’s been no guarantee they will.
Domain chief of research and economics Dr Nicola Powell says typically, the longer a property is owned, the greater the profit.
While the Domain report shows Darwin has the longest tenure of any capital city, at 12 years, it has one of the lowest profits; the median profit for a home owner reselling is $145,000.
It comes up significantly short against other cities like Sydney, where the median profit is $410,000 and Brisbane, where the profit is $315,000.
Only Perth’s resell profit is less than Darwin’s, at $120,000.
“The longer tenure could also speak to the behavioural economics side of our housing markets, that solid emotional and financial tie; [but also] a home owner who won’t sell for less than they purchased unless financial circumstances force them,” she says.
Triple once had a client who purchased their property for over $500,000 in the boom period, and when it came time to sell, Triple advised him to keep it while the market was down.
“Then I called him back the next year to tell him it’s gotten worse,” he says.
During COVID-19, unfortunately, the client had to sell the property for financial reasons.
“So I sold it for $200,000, and it dropped $300,000. That’s a massive loss,” says Triple. “When it settled, I phoned him, and he thanked me very much because we were lucky because another agent had just sold [a similar property] for $155,000. And I held the highest price for two years. If I had the same property today, I must have gotten an extra 50 grand to $250,000. So it hasn’t gone up much.”
While some keep their property for the potential profit, Baldock says that people in Darwin like to hold onto property in general, even those who purchased post-Inpex, which would explain why the city’s tenure is so long.
“Most times when a family outgrows a unit, they buy a house and keep the unit as an investment property,” she says.
With the tight rental market and yields at 5 to 7 per cent, units, in particular, make an attractive transfer from owner-occupier to investment properties.
“We do have quite a big investment portfolio throughout our units in town,” Baldock says. “So I’m not surprised those figures have been tightly held.”
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