Could Darwin Property Spring Back to Life?

Looking at the latest capital city property figures from CoreLogic, Australian real estate has one obvious outlier.

Right now, Perth, Brisbane and Adelaide remain at record high prices, while other cities like Hobart, Canberra and Melbourne are feeling the serious impact of rate hikes, still below their 2022 price peaks.

However, astonishingly, Darwin remains 6.6% below its record property market, a level it hasn’t exceeded since May of 2014 – almost a decade ago!

With price-conscious investors flocking to Perth and Adelaide, Darwin has curiously been completely left behind, despite having the lowest median price of any capital city – just $498,433. That’s less than half of Sydney’s median and still roughly 30% less than Perth, the hottest market in the country.

And, as far as cash flow is concerned, Darwin actually leads the nation in terms of rental yield:

So, what explains the complete lack of growth in Darwin over the past decade?

And, as affordability continues to worsen around the country, could things be about to turnaround?

Opinions on the subject remain very mixed.

According to PropTrack’s director of economic research, Cameron Kusher, a high volume of weakening stock, and largely unchanged demand levels, mean that prices are set to remain relatively stagnant on the back of 2023’s 2% price decline.

As of December 2023, total stock of available properties has risen 4.8% year on year, while realestate.com enquiries had risen just 2.6% - as one measure of supply and demand changes.

However, other price expectations are far more positive, with many experts pointing to a slew of infrastructure projects in the works.

Topping the list is a series of 25 joint Department of Defence-US military projects, worth an overall $25 billion and creating an estimated 7640 jobs.

Then, there is the $5 billion Barossa gas project and the impending completion of Charles Darwin University’s Darwin CBD campus.

According to Raine & Horne Darwin general manager Glenn Grantham, the simultaneous completion of these projects could have an impact similar to that of the $30 billion Ichthys gas project, which coincided with a property price rise of 6.5% within just a single month, amidst a broader Darwin property boom back in 2012.

What will remain a key factor though, is Darwin’s population size. With just 160,000 people, and a slower rate of population growth than the rest of the nation (as forecast by Deloitte Access Economics), Darwin will be prone to greater economic volatility. The effect of new industry projects will exert a far greater influence upon than it might in a larger city, with greater economic diversity.

Note the clear volatility in Darwin’s historic and forecast economic growth, relative to the rest of the nation:

So, despite some exciting projects on the horizon, the outlook isn’t overwhelmingly positive for Darwin just yet. There remains a lack of momentum in the market, and an underlying level of risk stemming from the size and rate of growth of the population:

However, it’s not unthinkable to imagine a scenario where Darwin becomes an increasingly attractive option for investors over the next several years. With once affordable alternatives like Perth surpassing a $700,000 median price, some overflow into Darwin seems likely if the pace of growth continues elsewhere.

Certainly, one to keep an eye on!