Darwin is a property market that can, at times, be overlooked. But based on what we’ve been seeing on the ground for a number of months, the data is now clearly starting to catch up.
While Sydney, Melbourne, Brisbane and Adelaide have been getting most of the headlines, it’s Darwin that’s been performing best with a 3.8% quarterly increase in house prices. If you’ve been following my commentary, this shouldn’t come as a surprise as it’s something we’ve been speaking about since 2024.
Darwin has always been a unique market. It’s not a place where owner-occupiers drive demand like most cities. It’s investor-led, with more than 55% of the population renting. And when investor appetite increases, Darwin tends to move quickly.
There are two core drivers behind the most recent uptick in property prices. Yield and the economy. Investors are again chasing cash flow, and as interest rates stabilise and expectations of further cuts build, the prospect of strong rental returns is becoming even more appealing.
Darwin currently offers some of the best yields in the country, with house prices still relatively low and rents climbing, the numbers are hard to ignore.
We’re regularly seeing four to five rental applications per property when priced correctly. Many of the homes we’re purchasing are already tenanted, and vacancy rates are nearly the lowest in the country.
Darwin is also starting to see its economy pick back up again, and that’s obviously the factor that is driving tighter vacancy rates. The entire state typically relies on infrastructure and major project activity. When the local economy moves, it boosts contractor demand, who in turn need rental accommodation, and that pushes prices higher. That’s exactly what we’re seeing now.
The construction pipeline is also picking up, population growth is returning, and the economic sentiment is turning positive. When those factors line up in Darwin, price growth tends to come quickly and often earlier than expected.
For the past several years, Darwin underperformed. Price growth was flat, investor confidence was low, and sentiment in general was poor. But what often happens in markets like this is they rebound faster and sharper than most expect. It’s not dissimilar to what we saw in Perth over the past few years.
Darwin doesn’t tend to do things slowly and steadily. It moves in cycles with long periods of underperformance, followed by rapid bursts of growth.
That’s what makes it a “trading market”, which is what I consider a place where smart investors can get in when prices are low and sentiment is down, ride the wave of growth, and then move their capital elsewhere when things plateau.
But knowing when to enter is key. And that time appears to be now.
We first flagged Darwin’s upside over 12 months ago, when the indicators started to turn. Since then, yields have remained strong, listings have stayed tight, and buyer activity has steadily picked up. All signs are pointing to further growth in 2025, especially if interest rate cuts continue as many expect.
Darwin also has one of the most undersupplied housing markets in the country. According to recent data, there was a 44% shortfall in new homes built in FY24, following a 49% shortfall the year prior. In a city where housing stock was already limited, that’s a major pressure point and one that’s helping drive this latest increase in prices.
If history is any guide, this momentum may continue through 2025 and into 2026, particularly if we see additional rate cuts and continued infrastructure investment.
For those who understand the market and are willing to move before the media catch up, Darwin is shaping up as one of the most promising opportunities in the country right now.