Darwin’s heat was always going to sting after 10 years in Tasmania.
But it was the sting from its rent that took Michael Christopher by surprise — $260 a week for a room with no kitchen in Millner.
Three years later and the money’s stretching a little further: he’s paying $300 a week for a two-bedroom apartment with a balcony in the same suburb.
It’s a long way from the $200 a week, three-bedroom house and yard available in his old neighbourhood in Devonport.
In December last year, the median rent for a Darwin three-bedroom house was around $488.
That was on par with Sydney.
Yet at the end of last year, the vacancy rate was 6.3 per cent — similar to a mining town in a bust cycle.
So why is rent in Darwin so high when there’s an excess of vacant properties?
This investigation is part of Curious Darwin, our series where you ask us the questions, vote for your favourite, and we investigate. You can submit your question or vote on our next topic here.
Is rent expensive in Darwin?
It would appear so, particularly in comparison to the vacancy rate.
However, it is dropping.
|City||Median weekly rent for three bedroom house ($)||Vacancy rate (%)|
(Source: REIA December 2017)
Another real estate group, CoreLogic, recently released its median rent data for the March 2018 quarter, and found Darwin was the only place in Australia where median rent across all dwellings fell in the first quarter of 2018 to a median of $474.
According to its data, Sydney and Canberra now have a higher median rent.
But Darwin still boasts the greatest rental yield at 5.8 per cent.
In smaller centres of a similar population, like Mackay, a two-bedroom unit costs $215 a week. In Cairns, the same would cost $350 a week, according to realestate.com.au figures.
Those cities each had a vacancy rate of 3 per cent and 1.5 per cent respectively in February this year.
But while many residents told the ABC they believed rent was expensive in Darwin, they noted it had dropped from the days of the ‘Inpex boom’.
Rent falls in recent years
The Ichthys Inpex LNG Project brought thousands of workers to Darwin from 2012 — with 8,000 on site each day during its peak construction phase.
That created a huge demand for rental properties, and by September 2013 a three-bedroom house in the Darwin CBD had shot to $863; a week a four-bedroom house was $982; and a three-bedroom unit was $809, according to REINT figures.
Demand was easing by June 2016, with rent for a three-bedroom house falling 17.5 per cent in a year.
Michael Christopher was shocked at the cost of Darwin’s rent when he moved here in 2015. (ABC News: Emily Smith)
Real Estate Institute of the Northern Territory chief executive Quentin Killian said because the pool of housing was relatively small in Darwin, it responded quickly to economic changes.
He believes the major impacts from the wind-down of Inpex’s construction phase have now been felt.
“Rents have come down quite dramatically over the past 12 to 18 months,” he said.
“There is likely to be a little more impact on the unit market as the last of the FIFO workers tend to leave what is still in the marketplace.”
Does Darwin’s history explain its real estate?
Darwin has always been impacted by the boom-bust cycle, according to NT Museum and Art Gallery curator of Territory History Jared Archibald.
From gold mining in 1869 to setting up the Defence Force barracks, housing has rarely met demand during peak times of activity.
This is because investors know workers will leave their dwellings vacant as soon as a project is finished.
Cyclone Tracy also impacted the city’s housing, wiping out stock in 1974.
Renter Michael Christopher believes this has now left him without the option of renting a large, cheaper home or buying a “fixer-upper”.
“I’d say I’d go for an older house but there’s very few of them since Cyclone Tracy,” he said.
“Darwin’s only been rebuilt since 1974 basically. There’s no old federation houses or terrace houses.”
After Cyclone Tracey hit Darwin in 1974, much of the city was rebuilt. (National Archives of Australia: AAP)
Mr Archibald also believes Darwin’s isolation has prevented it from developing large secondary or tertiary sectors, that could retain a stable population.
“We get the bubble and then it readjusts, but it never seems to crash out like it does down south,” Mr Archibald said.
Do transience and isolation drive up rent?
Many workers move to Darwin for short stints and are only ever looking to rent, Mr Killian said.
This is fuelling the market, even when vacancies are high.
“A lot of the people will come in on three or four-year contracts [and] until they fall in love with Darwin, as many people do, they’re not inclined to make a purchase,” he said.
“There used to be about a 15 per cent turnover in population almost about every year.”
Having the Defence Force in town also impacts rent — particularly as its personnel have a clause in their lease allowing them to break it, if they’re forced to move.
That could leave a lot of landlords out of pocket if an entire regiment was moved out of town, but it could also bring a boom when one arrived.
To add insult to injury, Darwin’s workforce has limited options when it comes to living arrangements, especially compared to east-coast residents, who can work in Sydney but live in Wollongong.
Mr Kilian said this exacerbated demand in the Top End rental market.
“If you’re living in Darwin and you’re working in Darwin, that’s it. You don’t have that choice,” he said.
Are dwellings empty because landlords won’t drop prices?
Rick Trippe, a Top End real estate agent of 30 years, thought that accounted for some of the vacancies.
When Inpex came to town, agents had more than 10 workers bidding on a single place.
“It was sensational then,” Mr Trippe said.
“Now it’s a different kettle of fish. You have to meet with the market.”
At one point, agents had more than 10 prospective tenants bidding on a single property. (ABC News: Nic MacBean)
Those that don’t lower their prices end up with vacant properties, with the high count of empty dwellings giving tenants bargaining power.
Though some of the big corporations in town might be able to afford to leave places vacant, Mr Trippe said the majority could not.
“A lot of mum and dads and southern investors here [will think it’s] better to have a good tenant and drop the rent than keep it vacant,” he said.
Would renters be better off buying?
Although rent remained relatively high, Darwin’s property prices plunged 6.5 per cent between January 2017 and January 2018, which Mr Trippe believed should prompt some renters to buy.
That gave Darwin the highest rental yield in Australia — meaning that a cheap investment would earn more rent than in other places.
“It would be a great time to stop going on the rental roundabout and pull your finger out and buy a property,” Mr Trippe said.
Mr Kilian also believed it was a good idea, particularly for first-home buyers.
He pointed out the Government had introduced a stamp duty rebate for first-home buyers, which he said could save them thousands.
Is rent likely to drop in the future?
That’s hard to say, although a number of pending government decisions could have an impact.
Over recent weeks, speculation has mounted the NT Government will join all other Australian jurisdictions by introducing a land tax — which could cost Darwin households about $300 a year.
It’s a move the real estate industry has been opposed to, saying it would reduce investor confidence.
Last week the NT Government announced it would lift a moratorium on fracking — which industry stakeholders hope will lead to a resurgence in population as workers move to town.
If that pans out, it would create a demand for housing which could drive up rent.
Yet with Inpex finishing up, and no population surge forecast for the short term, the negotiating power could be set to return to tenants.
Have a question you’d like answered?
This story came from an audience question. Submit yours below and we just might answer it in a future Curious Darwin investigation.