Darwin outpaces Perth as one of the final frontiers for capital growth

Having spent a decade in the doldrums — with prices in May last year lower than ten years earlier — the Darwin property market has shot the lights out.

Over the past quarter home prices in city soared 5 per cent, which was more than double Perth, the next best performer at 2 per cent, taking price growth to a stellar 19.8 per cent for the year, according to Cotality.

The market boom at the top end appears to be slowly drawing to a close, according to agents, drawing the final curtains on the nation’s last large property upswing.

But not without a final tail wind.

When it comes to days on market for houses, Darwin’s Gray and Wanguri are currently the two fastest selling suburbs in Australia, with Farrar coming in at number six. There are now Darwin suburbs, however, in the corresponding top 10 for units.

But the latest Domain data shows that annually in Darwin houses actually declined 3.1 per cent, but showed there is still demand by rising 1.2 per cent the past quarter. It was the unit market that has boomed, up 25.6 per cent for the past 12 months yet below its peak by a sizeable 8.2 per cent.

Darwin’s overall upswing was kicked off by southern buyers, mainly investor groups and buyers agents, priced out of the southern capitals, chasing cheaper entry points and healthy rental yields.

A central driver of the market was investors seeking residential properties to park in self-managed superannuation funds (SMSFs), says local buyers agent Belinda Tennant.

In June, the Federal Government, as part of a deal with the Greens to pass its broader property tax changes, announced borrowing for residential property via SMSFs would be banned.

Ms Tennant, of Thrive Property NT, said there was a sudden rush for properties in Australia’s Top End, before the law takes effect next month.

“It’s suddenly busy but that will be up until 10 August, with interest from people wanting to buy through self-managed super funds,” Ms Tennant told Australian Property Investor Magazine.

“Then it will be interesting to see what happens.”

Regardless, vendors remained keen to secure top dollar.

“Obviously vendors still think that property prices are right up there,” Ms Tennant said.

Demand from southern SMSF purchasers had been “definitely driving the market” over the past 18 months.

“Vendors have been getting good prices from SMSF purchasers at the moment and there’s not a lot available to buy,” Ms Tennant said.

“I am trying to buy for a buyer at the moment that needs to exchange by 10 August and there are very few available.”

Big house, unit disparity

Darwin historically, with a population of just 160,000, is susceptible to the vagaries of local industries, and has seen prices fluctuate substantially.

As at May last year, despite Darwin dwelling prices having grown 28 per cent over the preceding five years, they remained 0.5 per cent below their peak attained a decade earlier.

According to researcher Cotality, the median price of a Darwin house is $766,350, up 19.3 per cent in the year to 1 July and up 5.4 per cent for the quarter.

The median price of an apartment is $472,572, up 4.3 per cent for the quarter and 20.9 per cent for the year.

The unit market nationally has become the clearest sign of a changing market. Prices fell in every capital city, but with the notable exception of Darwin.

From here agents expect the market to cool, although a lack of supply, a very tight rental market and surging rents are likely to stave off the kind of harsh landing that may have typified the market in the past.

Darwin rents grew faster than any other capital over the past year, surging a massive 10.8 per cent for houses and 9 per cent for apartments in the year to 1 July, according to Cotality.

Ms Tennant said there were fewer than 200 properties currently advertised for rent in the greater Darwin area.

“Back in 2018 I was monitoring it, it was 850 properties available for rent, and now it’s down to a mere 188,” Ms Tennant said.

Healthy interest from owner-occupiers would also help underpin the market.

“There’s still owner-occupier interest and good owner-occupier demand in the higher price brackets, such as in Fannie Bay, at over $1 million,” Ms Tennant said.

“We’ve found owner-occupiers have been buying up, selling properties and buying better properties.”

The number of rentals tended to increase in October, at the end of the dry season, while January and February was a strong period for rental demand.

“In January and February, after the Christmas period, you’ve got government employees coming to Darwin on contracts, doctors, teachers; there’s usually an influx,” Ms Tennant said.

Darwin remains a growth outlier - for now

Billy Tariq, of Darwin’s Billy Nida Realty, said the market had been driven by southern buyers agents souring properties for investors, but the market was now “at the peak”.

“Between the end of 2024 to February this year buyers’ agents pretty much bought out Darwin,” Mr Tariq told API Magazine.

Buyers agents were seeking houses up to $750,000 and “tapping out” beyond that, while private investors were “tapping out at $900,000”.

Rental growth was helping to underpin the market, with yields remaining healthy, with some buyers shifting their sights to apartments.

Yet the slowdown was undeniable.

Mr Tariq was now getting about five interested parties visiting open homes on the first weekend, dropping down to “one or two” in the second and third weeks.

“From August 2024 I was getting probably 15 to 20 groups at open homes, and we were smashing it,” he said.

“Buyers were coming out of possum holes like no tomorrow.”

Domain Chief of Research and Economics, Dr Nicola Powell, said the June quarter marked a clear turning point for Australia’s housing market but singled out Darwin. 

“Australia is no longer moving as a single housing market.

“Sydney, Melbourne, Brisbane and Canberra are in decline, while Adelaide is easing, and Darwin is bucking the trend in units, highlighting how local affordability, supply and demand are driving increasingly different outcomes.”