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Darwin delivers: Investors flock north for opportunity as values surge
Investors have found a golden opportunity in Darwin, with values soaring nearly 20 per cent in the past year as the city catches up following a period of underperformance.
Despite a downturn being projected for the wider national market, Darwin’s dwelling values have surged in the past year, while avoiding the affordability strain facing other cities.
According to Cotality’s May Housing Chart Pack, Darwin’s dwelling values rose 19.6 per cent over the 12 months to April, and 3 per cent over Q1.
The data came as the combined capital city home values rose only 0.2 per cent in April, with Cotality predicting a downturn ahead amid softening conditions due to interest rate rises and the war in the Middle East.
Darwin also recorded the biggest change in days on market, with 36 days on market in April this year, compared to 54 days last year, reflecting rising demand.
Real Estate Central Darwin director, Daniel Harris, said the Darwin market was one of the strongest in the country, with solid demand from both owner-occupiers and investors.
“I just came from a conference with agents from all around the country – it became pretty clear to me that we’re pretty fortunate here,” he told SPI.
Harris said that despite affordability constraints, he had only seen demand taper off slightly in light of recent rate rises and economic pressures from the war in the Middle East.
“Despite our recent growth being one of the strongest in the last 12 months, we’re still so cheap compared to everyone else, so affordability is much greater than you’ll find in other states,” he said.
Harris said he was particularly seeing properties priced at $750,000 and below as the most popular, with many first home buyers looking to purchase and interstate investors chasing strong rental growth.
“And then above $750,000, over 90 per cent of our deals are to locals that are migrating here to live,” he said.
Harris added it was no surprise that Darwin wasn’t feeling the pinch as much as other locations, given it had been the worst-performing capital in Australia for a long time.
“It’s coming off such a lower base, and it has a much greater runway for future growth than some of the other capitals,” he said.
According to Cotality research director, Tim Lawless, Sydney and Melbourne were already five months into the early phases of a downturn, while mid-sized capitals have also been slowing.
“Listings are picking up as demand softens, interest rates are rising while affordability and serviceability pressures are biting,” Lawless said.
He said it was likely the combined capitals would move into decline over the coming months, with market momentum slowing as a result of the Reserve Bank of Australia’s three rate hikes so far this year.
“Importantly, the market was already slowing well before the hiking cycle commenced, highlighting the downside impact of waning confidence from late last year alongside rising inflation and worsening levels of housing affordability,” he concluded.
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