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The Top End: a population and housing market in decline
23 Aug 2020

A population and housing market in decline

Prior to the onset of COVID-19, population growth in the Northern Territory had been poor for some time. 

With the strong interstate migration to the Top End of the resources boom years going into reverse, the estimated resident population of the NT continued to decline through 2019, falling by 0.4 per cent to a total of 244,900. 

Continued weakness and poor population growth has had a sustained impact on dwelling prices. 

The poor economy continued to play a part in its subdued property market with 19.8 per cent price reductions for houses in the past five years and 35.4 per cent for units. 

The NT was the only state or territory in Australia that experienced population loss between 2018 and 2019.

After several years of major price reductions, these declines had begun to decelerate and, in some areas, to stabilise.

However, COVID-19 has had a renewed deleterious impact on dwelling prices with fresh price reductions of 0.9 per cent for houses and 2.9 per cent for units, albeit on very thin volumes to date. 

Although there has been an improvement in the outlook for the mining sector of Australia's economy, the strength in gold and iron ore prices is more likely to benefit Western Australia, with the construction phase of the Top End's major LNG project in the Timor Sea having been built and completed offshore in 2018. 

Residual risks for Darwin's housing prices

With low or negative population growth, below-average economic indicators, and the impact of COVID-19, the NT carries a higher level of risk than most parts of Australia for property buyers. 

Following 5 years of price declines the risk has been downgraded from medium to medium high. 

Darwin units can be a high-risk prospect

Units in Darwin carry a high level of risk to deliver negative capital growth due to a combination of oversupply, lending restrictions and low demand, which has been further reduced by COVID-19. 

There is also a risk of new supply further damaging already fragile confidence in central Darwin's unit market. 

The risk is particularly high in areas with a high concentration of off-the-plan units, such as in the Darwin CBD and its immediate surrounds, with 2,034 units in the pipeline, representing a significant 10.2 per cent potential increase to the existing stock, at a time of subdued demand.

Units in Darwin's delivered -33.7 per cent capital growth over the past five years, highlighting the potential risk of paying a price premium to buy new in a potentially illiquid market.