Housing

House prices can be a useful indicator of overall economic activity. This section looks at the analysis of key indicators for the Northern Territory's (NT) residential housing market. This includes the current state and performance of the property market by regions, residential building activity and approvals, house and unit prices and rental pricing. Analysis on housing affordability based on average incomes, home loans and rentals and housing related finance commitments are useful indicators of demand and supply for the NT's property market.

Greater Darwin

Greater Darwin (Darwin, Darwin suburbs and Palmerston) housing market conditions have continued to moderate over the last couple of years following strong growth. The median house price in Greater Darwin decreased by 0.8% in the December quarter 2018 and by 3.8% annually to $493,750. The median unit price decreased by 0.7% in the quarter and by 6.7% in annual terms to $350,000.

The annual decrease in the median house price was driven decreases in all regions, with the exception of Darwin North Coastal, which was unchanged. The annual decline in the median unit price was also driven by inner Darwin, which declined by 22.8 per cent to $355,000.

The number of houses sold in Greater Darwin increased by 14.1% to 226 in the December quarter 2018 and by 4.1% in annual terms (Chart 1). The number of units sold in Greater Darwin increased by 37.1% in the quarter to 159 and increased by 14.4% in annual terms.

Median weekly asking rents for a house in Greater Darwin increased by 7.0% in the quarter, but decreased by 5.6% in annual terms to $460 per week in the December quarter 2018. Median weekly asking rents for a unit in Greater Darwin decreased by 3.1% in the quarter and by 6.1% in annual terms to $340 per week (Chart 2). The rental yield for houses in Greater Darwin has decreased by 0.1 percentage points in annual terms to 4.8% in the December quarter 2018, while the rental yield for units was unchanged at 5.1%.

The vacancy rate in Darwin for all dwellings was 8.5% in the December quarter 2018. The vacancy rate for houses in Darwin has decreased by 0.2 percentage points to 6.5% in December quarter 2018 but increased by 1.1 percentage points to 9.2% for units.

Alice Springs

Caution needs to be used when interpreting quarterly movements for regional markets. The small size of these markets and low number of sales can lead to volatile results.

In Alice Springs, the median house price increased by 0.1% to $475,000 in the December quarter 2018, and by 1.6% annually. The median weekly asking rent for a house in Alice Springs decreased by 3.7% in the quarter, but increased by 2.0% annually to $520. Alice Springs recorded the only annual increase in the median house rent of the regional centres in the NT. The number of house sales in Alice Springs decreased by 7.6% to 61 sales in the December quarter 2018 (Chart 3). The rental yield for a house in Alice Springs was unchanged in annual terms at 5.7% in the December quarter 2018.

In the December quarter 2018, Alice Springs median unit price increased by 2.3% to $327,500 and was 40.3% higher compared to December quarter 2017. The median weekly unit rent decreased by 1.3% in the quarter to $390, but increased by 4.7% compared to the same time in the previous year (Chart 4). The sales volume for units decreased by 11.6% in the quarter and by 13.6% in annual terms to 38 sales. In the December quarter 2018, the rental yield for a unit was 6.2%, which is a 2.1 percentage point decrease in annual terms.

The vacancy rate for all dwellings in Alice Springs was 3.9% in the December quarter 2018, which is a decrease of 2.1 percentage points compared to the same time in the previous year. This was due to a 4.9 percentage point decline in unit vacancies to 3.3% whilst house vacancies increased by 3.0 percentage points to 3.0%.

Katherine

Due to the small number of properties on the market in Katherine median prices for houses and units tend to be highly volatile.

The median house price in Katherine increased by 4.0% to $312,000 in the December quarter 2018, but decreased by 13.3% in annual terms (Chart 5). There were 7 houses sold in the quarter, but there were no units sold in Katherine in the quarter.

The median house rent decreased by 4.8% in the quarter and in annual terms to $420 in the December quarter 2018. Median unit rents increased by 3.1% in the quarter to $330, but decreased by 5.7% in annual terms. The house rental yield in the December quarter 2018 increased by 0.6 percentage points in annual terms to 6.7%.

The vacancy rate for all dwellings decreased by 2.6 percentage points to 5.3% in annual terms in the December quarter 2018. The average vacancy rate for houses decreased by 2.5 percentage points 5.5% in the annual terms and the average vacancy rate for units decreased by 2.3 percentage points to 4.8%.

Tennant Creek

Tennant Creek data is highly volatile due to the lower sales volume as there are only a small number of properties on the market. Consequently, the Real Estate Institute of the Northern Territory does not report sales, rental prices or vacancy rates for units in Tennant Creek.

In the December quarter 2018, the median house price increased by 8.3% in the quarter, but decreased by 18.2% annually to $180,000 (Chart 6). There were five houses sold in the quarter.

For further information on residential property prices in the NT go to:

the Department of Treasury and Finance Property price index economic brief
Real Estate Institute of Northern Territory to access their Real Estate Local Market publication.

Capital city comparisons

The following capital city comparisons is based on data published by the Real Estate Institute of Australia (REIA) and the Adelaide Bank.

In the December quarter 2018, Darwin had the second lowest median house price of the capital cities, at $493,800. The median house price declined in Darwin, Melbourne, Sydney, Brisbane and Canberra in the quarter. The eight capital city weighted average median house price was $733,400 in the December quarter 2018, a decrease of 2.3% in the quarter and 4.9% in annual terms.

The Darwin median unit price ($350,000) was ranked the lowest of all capital cities. Elsewhere, prices ranged from $359,440 in Adelaide to $702,000 in Sydney (Chart 7). Adelaide (up 2%) and Hobart (up 0.1%) were the only capital cities to record a quarterly increase in median unit prices. The eight capital city weighted average median unit price decreased by 2.4% to $570,900 in the quarter and by 3.9% through the year to December 2018.

In the December quarter 2018, Darwin had the third highest median weekly house rent and the third lowest median unit rent, of all capital cities (Chart 8). The median weekly asking rent for a house in other capital cities ranged from $300 in Adelaide to $545 in Sydney. The annual change in median weekly asking rents for houses ranged from a 5.6% decline in Darwin to an increase of 7.9% in Hobart. Brisbane was unchanged through the year to December 2018. The annual change in median weekly asking rents for units ranged from a decline of 6.1% in Darwin to an increase of 11.9% in Canberra.

In the December quarter 2018, Darwin recorded the highest vacancy rate of all capital cities at 7.12%, Elsewhere, vacancy rates ranged from 0.6% in Canberra to 4.1% in Canberra. Darwin’s vacancy rate is susceptible to fluctuations due to the transient nature of the NT’s population (Chart 9).

Housing finance commitments

In the year to January 2019, the number of housing commitments (excluding refinancing) decreased by 11.5% to 2,446, which was driven by a 18.6% decline in non-first home buyers, partly offset by an increase in the number of first home buyer commitments (up 7.8%) (Chart 10). The value of total housing commitments (excluding refinancing) fell by 8.3% to $784 million.

For the latest data and analysis about housing finance commitments in the NT, see the Department of Treasury and Finance’s Housing finance for owner occupation economic brief.

Affordability

The following analysis of home loan and rental affordability is based on data published by REIA and the Adelaide Bank.

Housing affordability in the NT improved slightly in the December quarter 2018 with the proportion of income required to meet loan repayments decreasing by 1.5 percentage points to 19.4 per cent, and was 7.2 percentage points lower when compared to the same time in the previous year (Chart 11). The average monthly loan repayment for the NT was $1,817 in the December quarter 2018. The NT recorded the lowest proportion of income required to meet home loan repayments of all jurisdictions, which elsewhere ranged from 20.6% in the Australian Capital Territory to 36.7% in New South Wales. Nationally, 31.0% of income is required to meet home loan repayments.

In the December quarter 2018, the NT experienced the largest decline in rental affordability with the proportion of median weekly family income required to meet median rent of the jurisdictions, increasing by 1.3 percentage points in the quarter to 21.3%. However it decreased 1.8 percentage points in annual terms. The proportion of median weekly income required to meet the median rent in other jurisdictions ranged from 16.6% in Western Australia to 28.3% in New South Wales (Chart 12).

Dwelling supply

Accessibility and affordability of residential property in the NT is highly dependent on supply‑side responses that boost the stock of housing. Over the past few years, there has been a sustained period of above-average supply in the number of new dwellings in the NT, which has dampened prices. This, coupled with lower demand for dwellings, is anticipated to continue to restrain property prices in the NT.

Since the peak in mid‑2014, residential building approvals in the NT have decreased, down by 10.0% in the year to January 2019. This was driven by an 8.0% decline in house approvals to 563 and a 19.9% decrease in unit approvals to 109 (Chart 13).

For the latest data and analysis about building approvals in the NT, see the Department of Treasury and Finance’s Building approvals economic brief.

In the year to September 2018, the annual average number of total residential dwelling completions in the NT decreased by 30.1% (or 338) to 785. The decline in dwelling completions was mainly driven by a 56.8% decline in unit completions to 169, below the 10-year average of 712 and new house completions declined by 15.6% to 602. Conversions fell by 26.3 per cent to 14.

The number of new residential buildings under construction increased by 5.1% in the year to September quarter 2018, with unit constructions increasing by 10.3%, whilst houses under construction decreased (down 9.0%). In the year to September 2018, the annual average number of residential dwellings under construction was 967, which comprised of 679 units and 265 new houses. Construction levels remain below the 10‑year annual average of 1,263 dwellings (Chart 14).

In 2017-18, the value of residential building work yet to be done increased by 8.0% to $812 million. This was due to an 18.2% increase (to $549.8 million) in the value of unit work yet to be done, partially offset by a 14.8% decline in the value of houses (to $171.2 million). Alterations and additions work yet to be done increased by 6.0% to $90.8 million.

For the latest data and analysis about residential construction in the NT, see the Department of Treasury and Finance’s Building activity economic brief.

Explanatory notes

NT median house and unit prices and rents are sourced from the Real Estate Institute of the Northern Territory (REINT). REINT groups the regions of Darwin and Palmerston together as Greater Darwin. Darwin is further broken down into zones which covers the following suburbs:

Inner Darwin: Bayview, Cullen Bay, Darwin City, East Point, Eaton, Fannie Bay, Larrakeyah, Ludmilla, Parap, RAAF Base Darwin, Stuart Park, The Gardens, The Narrows, Tipperary Waters and Woolner
Darwin North Coastal: Alawa, Brinkin, Casuarina, Coconut Grove, Jingili, Lyons, Milner, Moil, Muirhead, Nakara, Nightcliff, Rapid Creek, Tiwi, Wagaman and Wanguri
Darwin North East: Berrimah, Marrara and Winnellie
Darwin East: Coonwarra and Darwin Airport
Darwin North: Anula, Bagot, Buffalo Creek, Charles Darwin University, Holmes, Karama, Leanyer, Lee Point, Malak, Northlakes, Sanderson, Woodleigh Gardens and Wulagi

The median house and unit prices and rents for the capital cities are sourced from Real Estate Institute of Australia (REIA), who receives data from state and territory Real Estate Institutes. REIA adopts the ABS definitions of ‘houses’ and ‘other dwellings.’ A ‘house is a single self-contained place of residence detached from other buildings. An ‘other dwelling’ is a single self-contained place of residence other than a house such as flats, home units, town houses and terrace houses. However for Sydney the definition of ‘houses’ includes houses, cottages, terraces, semi-detached dwellings, townhouses and villas and ‘units’ include units, studios and duplexes.

REIA’s weighted average median prices are derived from the quarterly median prices for all capital cities weighted according to the number of houses and other dwellings for each corresponding city. These numbers are sourced from the ABS 2011 and 2016 Census.

REIA’s housing affordability data is based on data from lending institutes and the ABS. They define median weekly family income as income from married couples with or without dependent children.

The ABS building activity survey is compiled using building approval details and returns collected from builders and other individuals and organisations engaged in building activity. The estimates represent all approved public and private sector residential building activity valued at $10,000 or more and non-residential building activity valued at $50,000 or more. The statistics relate to building activity so construction activity not defined as building such as the construction of roads, bridges, railways and earthworks are found in other ABS publications.

The ABS publication of housing finance commitments are derived from returns submitted to the Australian Prudential Regulation Authority and covers housing finance commitments statistics from banks and permanent building societies.