Analyst warns Darwinâ€™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 canâ€™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 â€“ 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 â€œdanger situationsâ€™â€™ 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 â€“ 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 Ryderâ€™s warnings, saying his predictions are a few years premature.
â€œIn our projects office, we have actually found 2014 to be more buoyant than 2013,â€ Mr Harris said. â€œThe Top End has some of the most severe existing housing shortfalls in the country â€“ just ask anyone whoâ€™s searching for a rental property this time of year.â€
He expects supply will catch up with demand eventually, but doesnâ€™t see this happening any time soon.
â€œAt our projects office, we deal with investors from all over the country and Darwin remains the preferred choice for Aussie investors chasing â€˜yieldsâ€™ and increasing the cashflow within their portfolio,â€ Mr Harris said. â€œThey get the benefits of investing in a mining town with the stability offered by a capital city.â€
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.