Yield-hungry investors flock Darwin’s housing market


Darwin is becoming the place-to be for many property investors who want to expand their portfolios, experts say.

Data from Raine & Horne showed that around 65% of investor inquiries in Darwin were from interstate-based buyers.

Raine & Horne Darwin general manager Glenn Grantham said the Northern Territory’s capital is becoming a go-to destination for many investors who are now focusing away from entry-level markets.

“In the past, savvy investors secured entry-level properties in markets such as Palmerston and outer Darwin fringe suburbs where the yields were a major appeal,” he said.

Mr Grantham said investors are now focusing on higher-priced markets closer to the CBDs that can still achieve yields of around 6% to 7% and are not affected by body corporate fees.

“The face of property investment in NT is changing with more investors focusing on upgrader markets that have traditionally attracted owner-occupiers such as Alawa, Jingili, Moil and other suburbs north of the city,” he said.

A four-bedroom, three-bathroom house with a granny flat at 14 Britomart Gardens Alawa was recently sold and had attracted offers of over $730,000.

The house is expected to rent for $860 per week, resulting in a yield of above 6% — something Mr Grantham believes is impossible to find in inner-ring suburbs in Brisbane, Canberra, Melbourne, or Sydney.

“The sale of 14 Britomart Gardens is illustrative of the changing face of inner Darwin real estate sales — properties that previously attracted only owner-occupier attention are now on the radar of investors,” he said.

“Not only can an investor achieve an unbelievable yield, but by buying a well-located, quality property within minutes of the city, the prospect of excellent capital growth is almost guaranteed.”

Herron Todd White valuer Cameron McDonell said yields can still be found across different market segments in the Northern Territory.

“When considering a new home, there are three new suburbs an investor can choose: Zuccoli (affordable), Northcrest (mid-range) and Lee Point/Muirhead (premium),” he said.

In Zuccoli, for instance, the cost of land and construction of a three-bedroom home on a 400 square metre allotment is around $550,000.

Rents in the area are between $620 and $650 per week, indicating a yield of up to 6.2%.

“In Northcrest and Muirhead, the yields will be slightly lower and even when the current low interest rates rise, it is evident how attractive such a property would be for an investor chasing higher yields not seen on the eastern seaboard,” Mr McDonell said.

In terms of property types, Mr McDonell said the most desirable ones are affordable units, newly-built homes, and Defence Housing Authority (DHA) homes.

“DHA is a solid investment no matter where in Australia — DHA properties are selling at 4.9% to 5% yields with nine to twelve years plus three-year options directly from DHA,” he said.

“You will find these properties in Muirhead in the northern suburbs of Darwin. However, if you are looking for slightly higher returns you can often find a DHA property on the secondary market selling at a higher yield with a shorter lease term.”

Photo by @henriquefelix on Unsplash

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