Is the Darwin Investment property good value at the moment…
Darwin is struggling to fill homes with tenants as oversupply hits the Darwin market
LANDLORDS are struggling to fill homes and tenants are desperate to find housemates as the market for Darwin units reels under an oversupply.
Rental prices in Darwin have recorded the largest drop in the country over the past three months â€“ by as much as 5.5 per cent.
Perth was next at 4.5 per cent and Canberra at 0.6 per cent, according to the CoreLogic RP Data May rental index results released this week.
The rental return in Darwin sits at $567.
In the past month, that has dropped by 0.8 per cent.
Over the last quarter, rental prices have fallen by 2.5 per cent, and this time last year, average rents were 5.5 per cent higher than they are now.
Yields have fallen slightly to 5.6 per cent â€“ from 5.8 per cent last year.
Local real estate agency and property managers Knight Frank is reporting some of the highest levels of vacancies on its database in some time.
Sales manager Todd Trainer said the drop in rents was probably because of the oversupply in the market.
â€œRentals are coming down in units, but theyâ€™re staying firm in houses,â€ Mr Trainer said.
He estimated that vacancies had increased between three per cent and seven per cent.
â€œIt seems to be across the board, more in the Darwin municipality than anything, and a couple of pockets in Palmerston,â€ Mr Trainer said.
â€œThe northern suburbs remains strong.â€
He said a three-bedroom, two-bathroom unit, that would have fetched anywhere between $770 and $900 just three months ago, would now get about $600.
â€œWe had properties on the waterfront that in some cases were getting $1000 a week,â€ Mr Trainer said.
â€œOne property was getting $1200, a week, but the tenancy ended and now weâ€™re back on the market chasing $900.â€
That kind of rental reduction is not as apparent in houses, however.
â€œWe would be chasing $750 to $800 for a three-bedroom, two-bathroom elevated house, and now youâ€™re chasing $600,â€ Mr Trainer said.
Moulden, Woodroffe and Gray are the three suburbs with the cheapest median asking rent for houses at $515, $540 and $550 respectively.
The most expensive suburbs to rent houses are Bayview, Larrakeyah and Fannie Bay, where the average rents are $1050, $1000 and $980 per week respectively.
Moulden is the cheapest suburb in Palmerston and Darwin to rent a unit, with average rentals coming in at $420.
Woodroffe is the next most affordable with average rents at $435.
After that, rents even out in Karama, Malak, Nightcliff and Gray at $440 before jumping to $500 in Coconut Grove, which is considered the 17th most affordable suburb in Darwin and Palmerston.
Darwin City and Larrak-eyah are the second-most expensive suburbs to rent a unit â€“ an average of $600.
And Bayview tops the list once again as the most expensive suburb to rent a unit, at an average of $700 a week. Last year, it was $750.
Mr Trainer said education was key.
â€œSome of the vendors think exuberant prices can still be achieved,â€ he said.
â€œItâ€™s a good market no doubt, but punters can get better value.â€
TENANTS PROVING EXTRA HARD TO FIND
THOSE wanting to fill rooms are finding it tough to attract potential housemates.
Gray resident Danny Warren said over the last three months Darwin has become completely dried up of potential tenants.
Heâ€™s advertised on various social mediums over the past three six weeks, and much to his disappointment, only one person has shown interest.
â€œTwelve months ago youâ€™d have your pick of choice,â€ Mr Warren said.
â€œIâ€™ve seen on Darwin Rental and Lease Breaks Facebook page, everyone is struggling to rent a room.
â€œItâ€™s been a bit of a cycle for the last three months â€“ itâ€™s been bad.â€
Mr Warren has lived in his three-bedroom home for two years.
He has one room mate and wants to fill the third room to save on cost.
He was charging $225 for the room, inclusive of electricity, but reduced it to $215 because there was no interest generated.
â€œI would consider it to be in a good part of Gray,â€ Mr Warren said.
He believes people simply donâ€™t want to be paying such high rents.
â€œOn average, a $500 house needs to be $400.
â€œUntil things start booming again.â€
Mr Warren negotiated dropping his rent when he renewed his lease with his landlord by $30, but said he should have requested a $100 drop.
â€œLandlords want to ride the price and keep it right up there,â€ he said.