Dr Nicola Powell from Domain regarding Darwin becoming the second most expensive city in Aus to rent

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Episode Transcript

Speaker 1 (00:00):
Joining me on the line to talk about Darwin renters
facing record prices with the latest Domain quarterly rent reports
showing the territory capital is now the second most expensive
city in Australia to rent a house, overtaking Perth. Well.
Joining us is doctor Nicola Pale, the chief residential economist
with Domain.

Speaker 2 (00:20):
Good morning to you, Nikola, A very good morning. Now
tell us a.

Speaker 1 (00:24):
Little bit more about well about this latest data Nikola,
and what it sees for Darwin.

Speaker 3 (00:32):
Darwin's rental market is very very tight at the moment.
We've got a record low vacancy rate of point one percent,
so that means if you're new into the Darwin location,
it's very challenging to find an empty and vacant rental.
It does tend to tighten it's a dry season, so
you do see the number of vacant rentals drop at
this time of year. But ultimately what he's doing is

(00:53):
pressurizing rents. We've seen some of the strongest rental growth
in Darwin compared to other capital cities. House rents rows
forty dollars in the three months to June and unit
rents in Darwin rows by fifty bucks in the three
months to June, so really big increases in recent months
and so Darwin's.

Speaker 1 (01:10):
Now overtaken Perth as the second most expensive capital city
to rent a house.

Speaker 2 (01:15):
Were you expecting that? And what do you think that?
It says really about our market?

Speaker 3 (01:20):
It really tells you just how tight those conditions are.
Was I expecting it? I mean Darwin has always kind
of been up there as one of the more expensive ones.
I think it happened quite rapidly because we saw such
strong rates of growth over the most recent quarter. So
you know, it is the second most expensive place in
which to rent a house. Units sit more in the

(01:40):
middle of the road when you compare it to other
major capital cities. But you know, the median asking rent
is seven hundred and sixty dollars a week now for houses,
so you know, is up there with the likes of Sydney.
But I mean Sydney rents are you know, I think
eight fifty a week?

Speaker 2 (01:57):
Does it depend what suburbs as well?

Speaker 3 (02:00):
Absolutely it does? And you make a really good point there,
because there isn't a uniform rental market in Darwin. There
are different dynamics going on. There are some suburbs that
have seen very rapid increases in rent over the last year,
and some are well, one that actually declined, which may
sound quite unusual, right, but it really it says to tenants,

(02:22):
know your market, understand the dynamics of your localized area.
So some of those locations that are seeing the strongest
rates of growth are Coconut Growth for houses, Bayview as well.
For houses, they've seen about eighteen nineteen percent increase in
house rents in the last twelve months. And then there
was one suburb that dropped, and that was houses in

(02:43):
Fanny Bay. They dropped by almost two percent compared to
this time last year.

Speaker 2 (02:47):
Isn't that strange?

Speaker 1 (02:48):
I wonder why that is because there are all sort
of suburbs that are quite close to the city. I
mean Coconut Growth a little further away than Bayview and
Fanny Bay, but quite I guess you would say affluent
suburbs as were well, or you know, you would imagine
quite nice houses to rent.

Speaker 3 (03:05):
Well, it just shows the localized dynamics that impact. And
I think when you've got rapid rates of rent increasing,
rents increasing, you get this nudging effect, so people then
get priced out they look towards more affordable suburbs more
affordable alternatives, and if there are listeners out there really
trying to seek those more affordable locations. One of the

(03:27):
more affordable suburbs to rent a house is Molden, and
that location has seen a nine percent increase. And then
if you're looking for a unit out in Palmerston, so
the suburb of Gray five hundred and forty dollars a
week for unit rents is one of the more cheaper locations,
and even Nightcliff units five point fifty.

Speaker 2 (03:47):
Yeah, right, it is. It's interesting.

Speaker 1 (03:50):
I guess with those suburbs, and you know, I for
plenty of us listening, you might sort of go okay.
That could be because they may be affected by crime,
or there might be different issues that are impacting some
of those areas. Nicola tell us, is it any sign
that this market is close to peaking?

Speaker 2 (04:04):
Or are those rents likely to keep climbing?

Speaker 3 (04:07):
So with a vacancy rate this low zero point one
percent and a balanced vacancy rate is between two and
three percent, the power really is with landlords at the moment.
I suspect we will continue to see rents climb, but
maybe not as fast as what they did over the
most recent quarter. So I think for tenants it is
really about knowing your market and you know, understanding that

(04:29):
at the capital city level, yes we're seeing record rent
but there are different dynamics at that suburb level. And
I really think it is about being open on location,
the type of home, if you're really trying to find
something that is much more affordable.

Speaker 1 (04:42):
Yeah, and given the fact that you know that there
is that demand for homes, I mean, what is the
solution in terms of you know, like like, is it
we need to build more homes? What are the you know,
I know there's plenty of government measures that they talk
about at different times, but it seems like it's tough
for a lot of people at the moment altily as
we try to attract workforce to Darwin.

Speaker 3 (05:03):
Absolutely, and I think it's a question I get asked
often and whether it's the sales market or whether it's
the rental market. Really at the core, it's the lack
of supply, and ultimately, if we had enough rental supply,
if we had enough affordable housing, even social housing, this
would help to balance out our rental market. And you know,
it's also ensuring we have the right policies in place

(05:24):
that helped first turn buyers get into the property market.
But ultimately it is about supply and one of the
things that feeds into higher purchasing prices is construction costs.
The build the cost to build has escalated significantly when
you compare it to pre COVID and when you even
think about the taxation associated with a new home. I
mean up to forty percent of a new home is

(05:47):
tax which is a huge amount of the overall cost.

Speaker 1 (05:51):
Well, doctor Nicho la pal, it's always great to catch
up with you. You break it down nice and simply
for us, which I think is really important for people
to hear. Thank you so much for your time this week.

Speaker 3 (06:00):
Warning as always always a pleasure.

Speaker 2 (06:02):
Thank you, thank you, Thanks so much.