The tight rental conditions in Northern Territory are encouraging more first-time home seekers to consider buying instead of renting, according to the latest study by CoreLogic.
Over the past 12 months to April, the median weekly asking rent across its capital city Darwin have risen by $70. During the same period, the value of combined rental valuations increased by 18.0%, significantly higher than the national average of 4.9%.
"Combined with low interest rates, positive cash flow opportunities may be encouraging investors to come back to this market," the report said. "Adverse rental conditions for tenants may be encouraging more potential first home buyers to buy instead of rent."
This rapid increase in rents is one of the major drivers of the increases in dwelling values across the territory. Over the year to April, Darwin registered the highest annual gain in dwelling values among capital cities at 15.3%, led by the 18.2% growth in house values and the 9.5% increase in unit values.
Despite this stellar growth, the overall value of Darwin's dwelling market remains 19.5% below the record high in May 2014.
The persistently tight rental market conditions and the low interest-rate environment are likely to remain the major tailwinds for the territory and Darwin's property market.
"In the longer term, it does appear that the negative interstate migration numbers are tightening. Eased social distancing and border restrictions may boost domestic tourism to the Territory, which would help to gradually recover this sector, and could have positive flow-on effects for pockets of the property market," the study said.
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