Downward Darwin housing market trend has stopped: BIS Oxford Economics
Darwin’s median house price has now fallen by 19 per cent after peaking at $620,800 in June 2014, according to a report released this week by BIS Oxford Economics.
This has taken the median to an estimated $505,000 at June 2018 and the upturn to 2014 was driven by the ramp up in resource sector investment led by the Icthys LNG project.
However, construction work on this project has been winding down, while lower commodity prices have also seen other mining facilities mothballed.
“The boom in mining investment was accompanied by a boom in new dwelling construction,” said Angie Zigomanis, head of BIS Oxford Economics' Residential Research Unit
“However, dwellings were being completed as mining investment was retreating and population growth contracting, which in turn saw Darwin’s vacancy rate rise to a peak of 7.8 per cent in December quarter 2016.”
House price falls in Darwin are expected to have bottomed out in 2017/18 and although quarterly median house prices have still been patchy, it appears that the downward trend has at least stopped, noted the BIS Oxford Economics economists.
Nevertheless, the oversupply means house prices are forecast to remain flat in 2018/19, before limited growth comes through over the subsequent two years.
The collapse in new dwelling construction is expected to see excess stock steadily absorbed in this period.
The report forecasts that Darwin’s median house price is to rise by a total of only five per cent in the three years to June 2021, which will result in a real house price decline of three per cent over the period.
Unit prices have retreated further than house prices, with the median being 33 per cent off its peak at June 2018 reflecting the high level of unit supply that has been added to the market.
BIS Oxford economists forecasts are that unit price growth over 2018 to 2021 to be slightly lower than for houses at a total four per cent, or a four per cent decline in real terms.
For a look at our take on the BIS Oxford Economics report for the national market check out, "Melbourne house prices forecast to tread water through to 2020/21".
