How much for a unit in Darwin?

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Hastings Over Mindil Apartment complex in Darwin.

How much can you expect to pay for a unit in Darwin?  Well, like most things in life … it depends.

But, the most correct answer is this … A LOT!

That’s right, if you want to buy a quality unit in Darwin, you’ll definitely need a stack of money.

For instance, you can pick up a unit at the Hastings over Mindil complex in Parap (section of Darwin) for somewhere in the low $700s.  If you’re a really good negotiator and you’ve got the finances in hand, you may be able to get one for under $700k if the seller is sufficiently motivated.  But, the bottom line is … these things are pricey; at least that’s my take on it.  Of course, I’m always a few years behind and I remember when they were selling these units off the plan and asking the outrageous price of $500,000!  I couldn’t believe anyone would pay that much for a 3 bedroom unit.  That was back in 2005.

Now, you get some good quality with these apartments.  They’re all 3 bedroom and the complex amenities are excellent.  For instance, there are two pools; one’s a normal pool, the other an Olympic size lap pool.  There’s also a putting green, tennis court, barbecue area, and horticulture area.  And, the facility is immaculately maintained.  Of course all these “goodies” come with a price; the body corporate fees run about $2,000 a quarter.  But, as they say, “You get what you pay for.”

As an investor, you want to look at rents.  Now, I’ve got some good news and bad news.

First, the good news – rents in Darwin are pretty high.

Next, for the two-fold bad news.  First … yes, the rents are high, but they’re not nearly enough to generate positive cash flow for most properties.  The cost to buy is high and the expenses are high.  Yes, interest rates are very low these days, but you’d still be hard pressed to buy an investment property in Darwin, with only 10% down, and manage to break even.  If you can, let me know.

Second, rents are coming down.  Yes, rents are high but not a high as they were.  My property manager is telling me he seeing drops as high as $100 per week.  And, landlords are accepting them.  They have to; $100 less per week is better than 100% less per week!  But, rents at Hastings Over Mindil still sit comfortably at say $800 per week.  You may get a better deal, you may pay a little more, but $800 per week is about the going rate.

Is it pricey to buy a unit in Darwin?  I would say yes.  But, I must keep in mind, everything is relative.  For instance, if you’re comparing a 3 bedroom upscale unit like the ones at Hastings over Mindil against a similar one in downtown Melbourne, then Darwin may appear cheap; a bargain; a steal.  So, someone from Melboure may view apartments in Darwin as very reasonably priced.  It all depends on your perspective; what you’re used to.

And, if you’ve got a spare $2,000,000 lying around under your pillow and you’ve always wanted an apartment in downtown Darwin, this may be the perfect time to buy.  Yes, prices are high but with all the building going on, you may find developers ready to deal; ready to work with you on price.  Who knows, you may pick up three units for your $2,000,000, then in a couple of years sell two of them and get your $2,000,000 back.  That, of course, would mean you got your third unit for free.  That’s my kind of deal.  But, there’s always the other possibility … the market continues to go down.  But, I’ve never seen this happen; doesn’t mean it won’t; I’ve just never seen it.

Is it time to buy a unit in Darwin?  Let me know your thoughts.

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Comments

    • clint
    • June 24, 2015

    hi Dave,

    Yeah im currently on a 2 yr contract and it almost seems more economical to purchase rather than rent. Im thinking buy 2bedder in any of those apartment complexes i.e. hastings or spirit on avenue (which is where im currently renting 1 bd at $650/wk).
    I just find it hard to predict/speculate where the short term market will go from here will it drop before spiking up – who knows as i want to buy in the most opportune time. If these 3 bedders were going for 500k 10 years ago and now selling for around 750k thats around 4.1% growth. Question is will that growth continue?

    1. Hello Clint, Thanks for your comment and question. Will growth continue? I have no idea and I would venture to guess – neither does anyone else. But, there are some indicators that suggest “growth” is built in to the residential market. Here are some questions to consider: Will population go up or down in the next 10 years? Will labour rates go up or down in the next 10 years? Will the price of building materials go up or down in the next 10 years? Will the price of residential building blocks of land go up or down in the next 10 years? If the answer is “UP” for all four questions then doesn’t it seem logical the price of residential homes will go up? The only way they can go down is if employment dries up and people leave town in droves … and that’s why I asked the first question above – will population go up or down? But, as always, I recommend you look for something that represents a “Good Buy” right now. Not something that will hopefully stack up 10 years from now; but something that breaks even or makes money for you right now. I would even suggest you get a bigger place if you can and rent out any extra rooms. Seems to me this is a smart way to turn the house you live in from a liability into an asset. Anyway, over to you; what’s your feeling about capital growth potential in Darwin?

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