NT property markets growing despite interest rate rises

Darwin is one of only two capital cities to have defied the Reserve Bank and seen a surge in the property market. Read how the NT has avoided the decline in prices.

Darwin has defied a nation-wide trend and reported a surge in home prices for December while most other Australian capitals have posted a decline in values.

The latest PropTrack data shows Darwin posted a .32 per cent increase in home prices in December, in contrast with a national decline of .21 per cent.

Only Hobart also reported an increase in December, posting a .11 per cent climb for the month.

Since March 2020, when Covid-19 first began impacting property markets, the Territory’s home prices have increased by 27.7 per cent.

Brisbane, at 43.1 per cent and Adelaide at 42.9 per cent reported the biggest property price increase since Covid.

The biggest loser for the December was Canberra, which posted a .43 per cent decline, followed by Melbourne at minus .34 per cent and Sydney minus. 19 per cent.

For the year, Darwin was one of four capital cities that reported an increase in home values with a 1.38 per centage increase compared with Adelaide 9.63 per cent, Perth 3.61 per cent and Brisbane 2.18 per cent.

Apartments in Darwin are still the most affordable in the country.

Darwin is still the most affordable capital city to buy a home, with the median value at $499,000 compared to the Australian capital city average of $788,000. At $560,000, Perth is the next most affordable capital to buy a home.

The two-biggest property markets both recorded declines in value in 2022 with Melbourne down 5.16 per cent and Sydney down 6.99 per cent.

PropTrack said the decreases nationally were primarily the result of rising interest rates, with the Reserve Bank’s .25 per cent December interest rate rise meaning the cash rate increased in 2022 from .35 per cent to 3.10 per cent.

The PropTrack report also gives a tick to the rest of the Northern Territory, with monthly growth at 2 per cent and annual growth at 6.08 per cent – well above the national average of minus 2.29 per cent.

PropTrack economist Anne Flaherty said Territory home-owners have been saved from plunging property values by the relative weakness of the Territory’s property market going into the pandemic.

“Across the board it’s the more affordable areas that have been more resilient to change,” she said. “For example, the average amount a borrower needs to buy in Darwin is substantially less than required in other capital cities, which means the relative impact in Darwin is less than in the other capital cities.

Darwin home prices have avoided the major decline in prices experienced by the rest of Australia.

“It comes down to supply and demand. Even though interest rates are potentially going higher in the first half of this year, they are probably quite close to being at their peak if they’re not already at the peak.

“If the Reserve Bank increases rates in February it will put further downwards pressure on prices and if the number of buyers per property remain strong, that may help counter some of the bad news of interest rates.”

Ms Flaherty said Australian property markets generally have recovered well since Covid-19.

“It’s important to remember where property prices have come from as well. Even markets where we’ve seen price declines, those markets are still well above where we were at before the pandemic.

“This means even if prices come down in Darwin, I would anticipate they’ll remain well above where they were in March 2020.

“With Darwin’s population forecast to continue rising and given the fact it will be more expensive to build new homes compared to previously, that’s going to increase demand for existing stock of real estate and that will help support property price resilience.

“It’s really just the fact Darwin is one of two capital cities to see price growth over December. While prices have fallen from their peak in Darwin, where prices are more affordable the impact of interest rates is not so great.”