Sun going down on house prices

By ERWIN CHLANDA

Looking for cheap housing land in Alice Springs and no red tape? You’ve left it too late.

Hermann Weber arrived in January 1957. He bought a residential block in Wallis Street on the old Eastside for £5. (It cost him £27 for a lawyer to do the paperwork.)

The land came with water and electricity. The road was dirt. Ablutions went into a bucket, emptied once a week, from a dunny backing on to a lane.

He started his house with a large room, a wardrobe dividing it into a bedroom and a dining room / kitchen.

The phone was in a callbox at the end of the street.

“But we had a house,” says Hermann, now 92. He expanded it as circumstances allowed.

The German-born built up a substantial electrical business and played an active role in the town’s commerce and politics.

He had business connections with Dave Tuzewski who lived in the same street and also did well in business while volunteering in community affairs.

My own housing experience was similarly uncomplicated. We arrived in late December 1974 from Streaky Bay in SA, where I had been editing the West Coast Sentinel newspaper for five years. We were heading for Cairns.

The devastation of Darwin on Christmas Day put an end to that. Cyclone Tracy became my first story in the Territory, shooting some of the first television footage of the disaster on the morning after, having flown in on the plane of acting Prime Minister Jim Cairns.

This was followed by many TV and print stories of the aftermath, when Alice Springs went all out helping evacuees travelling south. It was a place full of stories and we stayed.

I went to the Housing Commission (I think it was called then) and asked for a house. They handed me the keys, to put it simply. Six weeks later they rang and asked: “Do you want to buy the house?”

“How much?”

“$600 and the balance over the rest of your life at 4% per year.”

“Deal.”

I’m simplifying the process a bit, but in a nutshell that was it. The price of the house was $26,000 or $36,000 (can’t remember).

It was opposite where some years later the now troubled Yeperenye School was built. We used that land to graze our horses.

The Territory was under the management of the Federal Government. This “Canberra Control” was tirelessly denigrated by the emerging political right, ready to pounce when Self Government would be declared.

Canberra is still in charge today, except at arm’s length, spending vast amounts of money. (The Feds most likely still to have to bail out the NT if it goes broke – see below.)

It was a different story while the man from Canberra was in charge: White shirt, shorts, long white socks, and not answerable to local pressure groups.

This was the formula for the town’s growth: Several hundred blocks for whole suburbs were developed together. You could buy a block for what it cost to be developed – streets, footpaths, water, power, sewerage.

The land was free of charge. There was so much of it. Of course, there still is.

About 26% of the Alice Springs Municipality is still Crown Land, a total area of 84 square kilometres. Much of that is strewn with garbage.

Over the years the taxpayers recouped their investment which was at the core of the town's existence.

It grew. People like my family came and decided to stay, overwhelmed by the beauty of the surrounding country, the sunshine, the freedom, the social and commercial opportunities.

However, come Self Government on July 1, 1978, the blocks of land became much smaller and their prices much higher – a process that continued until quite recently.

Today, some easy conclusions about the town’s atmosphere can be drawn from the current realestate market: Locals are leaving and those who are coming are not planning to stay.

Values have nosedived but the rental business is booming. Only two places are available today when it’s usually some 15, says Eli Melky (at right), with 24 years of local experience as a mortgage broker and realestate agent.

He is also the town council’s longest-serving elected member, fourteen and a half years.

Rent for a two-bedroom flat in Alice is about $400 a week. A 4BR home is a minimum of $500.

This would suggest that people leaving town would be hanging on to their home here and renting it out.

The trouble is, says Mr Melky, homes here are roughly half the price compared with interstate where a ballooning of prices has been underway for some time. This is forcing people leaving Alice to sell in a poor market in their struggle to get a new abode somewhere else.

People relocating also find that banks will only take into account about 45% to 50% of the gross rental income to support an application for a loan.

The median price for a 3BR and one bathroom home in Alice is about $370,000 compared to Henley Beach in SA of $1.5m, according to the Advertiser newspaper.

The cancellation on September 30 of the NT Government’s $10,000 first home buyer’s grant doesn’t help, says Mr Melky, who immigrated to Australia from Lebanon 1977.

EXPLANATION: What happens if the Northern Territory becomes bankrupt? ChatGPT explains:

The Northern Territory cannot legally “go bankrupt” in the way a company or individual can. But it can become unable to meet its financial obligations. If that happened, the consequences are political and administrative rather than judicial.

Here’s what would happen:

• The NT is not a state — the Commonwealth has ultimate constitutional authority. Under the Northern Territory (Self-Government) Act 1978, the NT exercises powers delegated by the Commonwealth.
Unlike the states, which have constitutional status, the NT’s self-government can theoretically be altered or revoked by the Federal Parliament.

Because of this:

• The NT cannot enter formal bankruptcy or insolvency proceedings.

• The Commonwealth effectively becomes the decision-maker if the NT cannot govern itself financially.

If the NT could not pay its debts: There is no legal guarantee that the Commonwealth must pay NT debts, but in practice it would intervene to stabilise finances.

This could include: Providing an emergency grant or loan; imposing financial controls; taking over Treasury functions; appointing an administrator (similar to what has happened historically in financially distressed local councils).

The NT Government’s budget is already heavily dependent on Federal grants, so Canberra has leverage.

Creditors cannot seize NT assets. Government debt is not enforced like private debt. Creditors rely on government capacity and political backing, not asset seizure.

Could the Commonwealth revoke NT self-government? In extreme financial collapse, yes, legally it could, because the NT self-government exists only by Commonwealth statute, and the Federal Parliament could amend or suspend the Act and assume direct control. This would be politically explosive but constitutionally possible.

States cannot go bankrupt either, but they have constitutional standing and the Commonwealth is not responsible for state debts.
However, for the NT, there is still no legal guarantee that the Commonwealth must pay but intervention is far more likely, because the NT is not sovereign and cannot simply be allowed to collapse.