Australia's new best performing property market no one saw coming

Daily Mail​

a day ago

Australia's most affordable capital city market is now Australia's best performing housing market - with prices peaking for the first time in more than a decade.
The aftermath of Covid lockdowns saw house prices surge by double-digit figures in Brisbane, Perth and Adelaide, as young families priced out of Sydney moved interstate in search of a more affordable place to live.
Until early 2025, Darwin home values were still below a 2014 peak, reached during an Inpex liquefied natural gas pipeline construction boom that was followed by a property market plunge.
But after recovering gradually since Covid, prices are now soaring in the Northern Territory capital.
Investors are now snapping up bargain-priced houses in a small city with Australia's tightest rental vacancy rate of just 0.5 per cent.
Cotality research director Tim Lawless said landlord investors were chasing strong capital growth in Darwin, which is still a particularly affordable market.
'Investor numbers in Darwin have absolutely rocketed - they've pretty much doubled over the past year, more than doubled in value terms,' he told Daily Mail Australia.
'This upswing in housing values is being driven by investor demand.
'The affordability and the really high rental yields is probably the key thing that is attracting investors; again this is a supply thing - we haven't seen much investment activity in Darwin up until recently so there hasn't been a great deal of new rental supply.
'Whichever side of the book you're looking at, housing values or rental values, they're both rising quite rapidly now.'
Prices are also reaching new peaks after plunging a decade ago.
'I wouldn't say they stagnated until recently - they've had a pretty decent upwards trajectory since 2020; it was really, since 2014, they went through quite a decent slump - they fell substantially and then did virtually nothing,' he said.
'The last five years has been catch-up for Darwin - it's a reflection of that affordability advantage that Darwin has built up.'
Darwin's median house price has soared by 9.7 per cent during the past year to a still relatively affordable $641,997, new Cotality data for July showed.
But in the nearby satellite city of Palmerston, Driver house values surged by 12.4 per cent to $512,921, which is still attainable for someone earning an average salary of $78,567.
Unit values in Darwin, however, are still very affordable with a median value of just $390,863, following an oversupply during the Inpex LNG construction build that saw apartment values remain weak.
Darwin is still the only capital city market where someone earning less than six figures can buy a mid-priced house instead of just a unit, with banks typically lending owner-occupiers five times their pre-tax salary.
Like Brisbane, Perth and Adelaide during Covid, Darwin prices are roaring back to life and reaching new peaks after years of flatlining.
The Top End is now seeing the kind of boom that other provincial capital cities experienced during Covid lockdowns in Sydney and Melbourne in 2021, when interest rates were still at a record-low of 0.1 per cent.
This is despite the Northern Territory having a below-average population growth pace of 1.2 per cent as 2,234 people on a net basis left for another part of Australia.
Adelaide was Australia's second best performing market with prices up 6.8 per cent over the year to $895,726 but in the more affordable northern suburb of Andrews Farm, prices climbed by 14.5 per cent over the year to a still cheap $506,610.
Brisbane prices rose by 6.7 per cent to $1.02million but in nearby Bundamba, in Ipswich, they rose by 12.6 per cent to $646,332.
Perth prices rose six per cent to $869,689 but in the more affordable eastern suburbs, Midland prices rose by 13.2 per cent to a still affordable $637,998.
House price growth was more subdued in Sydney and Melbourne, which receive the biggest influx of overseas migration.
Sydney values edged up by 2.2 per cent to $1.526million, making it by far Australia's most expensive market.
The city's affordable south-west had bigger increases with Bonnyrigg prices rising by 13.6 per cent to $1.158million.
Melbourne house prices rose by one per cent to $952,339 but in Frankston North, they rose by 9.3 per cent to $658,157.
The Reserve Bank is widely expected to cut interest rates again on August 12, following an inflation drop, and the futures market is forecasting three more cuts by the end of 2025, which would take the cash rate from 3.85 per cent now to 3.1 per cent for the first time since February 2023.
Mr Lawless said more rate cuts would see wealthier, inner-city suburbs get the steepest price growth instead of the more affordable, outer suburbs as banks were able to lend more.
'As interest rates come down, it's probably unlocking a bit more credit for more expensive suburbs,' he said.
'They're also the markets where we've generally seen weaker conditions over the past couple of years.'