Pent-up local demand along with yield-chasing interstate investors has the potential to drive Darwin’s property market to be around the mark as Australia’s best-performed capital city over the next two (2) calendar years.
I think it is well overdue that Australia had a deep and meaningful conversation about our smallest and northern-most capital city.
As a civilian with fond memories from visiting Darwin multiple times for business and recreation, and as national property market analyst, I’m frequently impressed by what the Top End could become.
Unfortunately, Darwin is like a large paddock of unharvested crops left to wither in the field.
Aside from a couple of enormous gas projects, the last of which was developed over a decade ago, neither the public nor private sector have been prepared to meaningfully invest in it. So, Darwin has sat largely stagnant for decades.
As for Darwin’s real estate, a segment of interstate property investors has recently been lured to Darwin’s above-average rental yields and a ‘hope’ that its property market finds its mojo sometime soon.
Fun Facts about Darwin
One of Australia’s ‘youngest’ cities, Darwin has grown significantly over the last 100-years to now be home to 150,000 people.
It is a bit bigger than Bendigo and Mackay, although it has 20,000 less population than Cairns.
Australia took some great lessons from Darwin being bombed by 242-Japanes aircraft in 1942, and from Cyclone Tracy’s destruction of 80 percent of Darwin homes in 1974.
A few years after Cyclone Tracy, planning commenced for a satellite city at Palmerston, just 20 kilometres east of Darwin CBD. Palmerston is now a major urban centre within Greater Darwin.
Locals love the laid-back lifestyle and the year-round, warm tropical climate. And there’s an abundance of natural attractions and a rich indigenous heritage.
With $26 billion worth of annual economic output, Darwin’s staples for the last few decades have been offshore gas, live cattle exports, military personnel and government administration.
Development of the $37 billion Ichthys LNG project from 2012 to 2018 is still one of Australia’s biggest ever projects.
Analysis of Census data confirms that the ‘typical’ Darwin resident has better than average education and earns an above average income.
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Notwithstanding that, the current median house value of $565,000 for Australia’s 18th largest city sits behind 87 other townships across the country.
Darwin’s Property Market
In 1986, Darwin’s median house value of $88,000 was the second most expensive in Australia, behind only Sydney ($98,000).
Over the last 35-years, no other property market in Australia produced a stronger performance than Darwin’s whopping 212 percent growth in just 12-years to mid-2014.
Conversely, the last 15-years has seen Darwin dish up the leanest real estate period ever by any city.
The current median apartment value of $366,000 is 13 percent lower than in 2010, while house values have increased by just 10 percent over the last 15 long years.
CoreLogic’s latest data suggests that Darwin’s property market declined in the month of February 2025. A month of transactions is never a big enough sample size to be ‘reliable’ data.
In our 2025 Property Market Outlook for Australia’s Top 25 Cities, Propertyology’s forecast of 3 to 6 percent growth for Darwin included an assumption that the RBA would be largely stagnant with the Cash Rate during 2025.
If multiple rate cuts were made in H2 2025, Darwin could nudge close to 10 percent growth this year. And 2026 might exceed that.
While the best property market performers will be among Australia’s 400 regional cities and towns, it is feasible that Darwin’s performance over the 2-years ending December 2026 could be alongside the best of the eight (8) capital cities.
That said, with so many locations to consider across this incredibly big country, Darwin fails to satisfy all of the criteria required for Propertyology to assist property investors to place hard-earned capital into (I’ll elaborate shortly).
As illustrated in the below chart, the supply of resale housing stock tightened during the back half of 2024.
When we join the dots with other metrics it is crystal clear that the recent increased pressure is born out of a spike in property investor activity.
Adversely affected by playing in the weeds of social media forums, yield-chasing interstate investors are buying with ‘hope and hunch’.
Growth that is driven by sentiment (including a surge in interstate investors) is never as sustainable as growth driven by local buyers who have high confidence in their hometown’s local economy.
Darwin’s long-running underwhelming economy continues to be reflected in ‘ordinary’ levels of real estate activity from first homebuyers and from secondary owner-occupier buyers (refer chart above).
As for Darwin’s higher than average rental yields, one would be foolish to assume they can get a ‘Cash Cow’.
Interest expenses remain such that a typical house purchased with a 10 percent deposit will produce an annual net cash flow shortfall of circa $14,000 – only marginally better than various other locations that have superior fundamentals for both growth and risk profile.
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Darwin’s Challenges
A 5+ hour flight from all other major Australian cities is not to be ignored, but people will come if they build the appropriate facilities to support a robust economic development strategy.
For a few decades, multiple Northern Territory governments have displayed little vision, they have very limited financial resources and have never been able to attract the federal government support to realise Darwin’s enormous potential.
Throughout the first 25-years of this century, Darwin’s unemployment rate has been consistently below the national average.
But the total job volume trendline paints a more accurate picture of its long-running underwhelming economy.
Unfortunately, there continues to be very little meat on Darwin’s economic bone.
As with much of the last decade, there is a variety of grandiose major projects for people to get excited about – uranium, lithium, gas and solar.
But most of the projects have been proposed for many years, and they continue to fail a combination of environmental assessments, indigenous conditions, capital raising and availability of skilled labour.
The current two (2) major projects include the $750 million upgrade of both the Larrakeyah RAAF Base and Robertson Army Barracks (due for completion next year) and $515 million improvement to Darwin’s port infrastructure.
Other than that, Darwin’s current economic pipeline remains as bare as Old Mother Hubbard’s cupboard.
Even more important for long-term sustainability, Darwin has a dire shortage of economic diversity.
30 percent of the NT’s total revenue (GSP) comes from mining.
There is very little private-sector industry.
Despite an abundance of affordable land, natural attractions, and established airport and seaport infrastructure, Darwin grossly under-achieves in sectors such as tourism, manufacturing, construction, professional services and warehousing.
And ‘Chart 1’ (above) illustrates that a whopping 42 percent of Darwin’s workforce receives their salary from everyone else’s taxes – the public sector (Defence, Government administration, Health and Education).
While Darwin has always offered people with skills the potential to earn high salaries, they are often contractors who only stay for a relatively short period of their life.
Over the last 10-years, internal migration contributed a net population decline of 20,000 people.
The transient nature of Darwin’s workforce means that, despite strong incomes and affordable housing, a smaller portion of residents put down long-term housing roots.
65 percent of Darwin households own their home (compared to 74 percent nationally).
And only 17 percent of Darwin households are mortgage-free (whereas the national average is 34 percent).
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