Is the Darwin’s property bubble about to burst?

Analyst warns Darwin’s property bubble about to burst…

Darwin PROPERTY investors should exercise caution if investing in the Darwin CBD, a property analyst has warned.

Property analyst Terry Ryder, of hotspotting.com.au, predicts many investors will end up getting burnt once all proposed stock is built and they can’t find a tenant prepared to pay a decent rent.

Mr Ryder has produced a list of the top 10 markets to avoid and five markets to treat with caution – among which Darwin CBD was listed.

Half of the markets he advises against investing in are located in Queensland.

Mr Ryder said the two current “danger situations’’ in the market are inner-city apartment markets and regional centres, where a rise in supply coincided with a drop in demand, as is the case in many mining areas.

In Darwin alone, there are 2038 existing units. A Census from 2011 reveals 409 units were completed in the past three years.

There are an additional 2242 units under way – 224 of those units are newly constructed, 745 under construction and 1273 have passed the first stage of obtaining a development application approval.

Real Estate Central director of projects Daniel Harris has dismissed Mr Ryder’s warnings, saying his predictions are a few years premature.

“In our projects office, we have actually found 2014 to be more buoyant than 2013,” Mr Harris said. “The Top End has some of the most severe existing housing shortfalls in the country – just ask anyone who’s searching for a rental property this time of year.”

He expects supply will catch up with demand eventually, but doesn’t see this happening any time soon.

“At our projects office, we deal with investors from all over the country and Darwin remains the preferred choice for Aussie investors chasing ‘yields’ and increasing the cashflow within their portfolio,” Mr Harris said. “They get the benefits of investing in a mining town with the stability offered by a capital city.”

Whether it happens sooner or later, Mr Ryder believes Darwin, along with Sydney and Canberra, is heading in the direction of having major surpluses of inner-city apartments, just like Melbourne, Brisbane and Perth do already.