Rental pressure builds as Darwin investors sell

“There was a surge of vendors releasing their properties for sale in January, especially after many recognised last year had been very good for capital growth,” Mr Grantham said.

And many of those properties up for sale were long-term rentals.

“Given the transient nature of Darwin’s workforce, plenty of tenancy agreements end at this time of year and rather than seeking to find a new tenant, the owners are deciding to put the properties on the market for sale,” Mr Grantham said.

But with the city seeing an increase in owner-occupiers looking to buy, Darwin’s rental market is feeling the pressure.

Mr Grantham estimated that 85 per cent of buyers in Darwin are currently owner-occupiers seeking a first home or to upgrade.

A number of factors might mean that current constriction soon eases.

An increase in off-market sales between landlords and tenants indicates that renters are taking advantage of low-interest rates to buy.

“Some tenants are buying their rentals because they like the property so much,” Mr Grantham said.

“These off-market sales not only take the tenant out of the rental market but also take the long-term investment properties out too.”

A smaller pool of rental properties coupled with strong tenant demand, however, is expected to push up investment yields, luring those looking for a prime location to expand their property portfolio.

“If more local and southern state investors jump into the Darwin real estate market and give owner-occupiers a run for their money on properties … we will be able to meet some of the demand for rental properties,” Mr Grantham predicted.

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