Is Darwin Dead?

Sammy Gordon (0:05)

Good day, guys, there's been a lot of talk out there at the moment around Darwin, and in particular around the property markets all around Australia, and what's happening and playing out right now. But I've seen a lot of people coming out and trying to shit can Darwin. It's one of my markets, the only real market that I've been kind of vocal about. So I kind of defended a little bit vehemently. And I think when it really comes down to WhatsApp play right now in the marketplace, it's extremely interesting to watch the people that are talking about Darwin, because I have no idea whatsoever what they're talking about, because they even never got into the marketplace, they missed the boat, and they're trying to throw shit at the wall at people who got into a market that they didn't foresee coming. Now, the reason why I want to go down and break down this video from this perspective, I'm still actively buying in Darwin. I've got a lot of property there myself personally, a lot of clients have deals there as well. And really what I want to break down is so much to do with what's actually happening there right now, what I think still in the tank and where I think we are in this point in the cycle as well. And don't get me wrong, I always am assessing markets and trying to understand what is potentially in the tank, what has happened already, what do we think is still got the potential to have and happen moving forward, and then really what is the outlook moving forward? Because I'm always looking at when I'm potentially looking to buy into a market, when I look to just stop buying in a market, when I might look to an exit and exit window as well. So I'm always taking all this stuff into account to make sure I can make the best decision both for my own portfolio and then obviously for clients' portfolios so they can keep winning as well. Now that is the whole point of today's video. Today's podcast and really breaking down everything to do with that and where I'm seeing the market playing out moving forward. Now guys, the big thing I want to cover off and I think the really important thing to note is a lot of people are trying to again throw shit at it. Oh, it's done. It's done. It's done. It's all over Red Rover, Darwin, all the rest of the thing. What I think is really funny is that these same BAs and investors that are carrying on like this as if you've missed the boat or whatever. So many of the investors who are bought in there have done 100, 200,000 dollars plus worth of capital growth in. Some of them can be 6, 12, 24 month window, whatever it is relevant to their time frame. At the same time as those same BAs buying in other markets that have actually been declining in value or done nothing over the last two years. So maybe those guys should stop throwing shit at the walls before they actually assess what's actually going on and maybe assess their own deals in the portfolios and the lackluster performance they've produced for their clients. Now moving on from that side, and I think the really, really important thing to note, again, I kept coming back to this little thing. Darwin is the only capital city at time of recording right now with the current data that we have available. That in the month of October, so coming into the month of October, looking back, the only market that over the last month has still recorded positive growth at 0.4% over the last month, and the only market in Australia that has still recorded positive growth over the last quarter. So not only the last month, but also the last quarter. Every other capital city in Australia has recorded a price decline. It doesn't mean that they don't have potential and they don't, there aren't still some great running markets within there or markets that will continue to perform once the current lackluster market and the current sentiment passes a little bit. But the real, obviously, topic of today's conversation is Darwin. And the really, I think, interesting point of this is over the quarter, it rose by 0.5%, so by half a percent. But over the last month, it rose by 0.4%. So if anything, it actually shows that out of the 0.4, out of the 0.5%, 0.4 of that, so almost the whole amount has come in the last month, meaning the market might have paused for two months. And then obviously, we've seen that little projection, that little pick me up in the market as well. And we've seen that little flow on happen in the last month too. So very, very promising for the market. And even literally just holding steady, and not even stagnating or going backwards, but holding steady during this window where low sentiment is around right now while we watch rental booms play out, while we watch those rental markets play out as well. So that's the first thing. The second thing that I think is really important as well is it's the tightest vacancy rates in Australia. It's been sitting at the tightest vacancy rates in Australia for the whole year. Between it and Hobart, it's sort of sitting between about and around about 0.4% all year. Hobart has just ticked up to 0.6% in line with both Adelaide and Perth. They're both sitting at 0.6% as well. But Darwin is currently sitting at 0.4% of a vacancy rate. Now, we are going into the end of a transient window being, it is a city that is dominated by a lot of public sector workers and people that are coming in on contracts always end of the year, October, November, December. Vacancy rate does pick up a little bit, but it typically does in September as well and has barely moved an inch all year since it came off the back of the year. But I think over the next couple of months, we will see a slight tick up. But once again, it is the lowest vacancy rate in Australia by 0.2%, sitting at 0.4%, which is proper, proper boom conditions. So very, very good to see, very, very nice to watch that play out. Now, again, even if we have the next two or three months where the vacancy rates do tick up, heading into December, as always every single year, we see those new contractors come in, coming into January, falls off a cliff once again. Normally by February or March, falls back to the floor that it was around about this time every year, which is around about that September, October window as well, just before it obviously starts its little run up. Now, the other thing is really interesting with this is as of literally right now in terms of, it's just come out in the first week of October, Darwin has actually just overtaken Perth in terms of the second most expensive capital city in Australia to rent. Now, why is this important? Not only does Darwin have the second highest incomes in Australia, so it has the ability to support the higher rents compared to almost anywhere else in Australia as well. Not only that, but overtaking that, the only capital city that's in front of it, the only city that's in front of Darwin in terms of a median rental house price is Sydney, Metropolis with a median house price twice of that of Darwin. So Darwin sits currently at 633,000, Sydney sits at 1.198 million, so it's literally almost double, it'd be almost exactly double, just under 95% or something like that, double what the median purchase price is in Darwin to buy into Sydney, and yet your median rents are only $90 a week apart. So median rent in Darwin just rose as an average to $760 a week, and the median rent in Sydney is $850 a week. Just over to Perth, who's sitting at $750 a week, all the rest are down around about 700, Perth $750, Darwin $760, Sydney at $850 a week. So you've literally got the lowest house price market in Australia by around about $150,000, with the second highest rents in Australia and still sending, still growing. So it's a strongest growth rate as well from a rental perspective in Australia too, combined with the second highest incomes. So what I'm gonna do is I'm gonna map out a little bit of pros and cons list for everything to do with Darwin and really mapping out, is this market done? Has its finishes dashed? Yes, it's performed exceptionally well over the last 12, 18, 24 months, but how much run has it really got left in the tank? I'm gonna finish with my final point around this and everything to do with that. So like I said, guys, I'll come back to my final point right at the end, but what I'm going to do, now if I throw the pros and cons list in here, guys, and I'm going to be dead honest like the way that ISS markets as well.