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ABC News
Business
Alicia Perera and Jack Hislop

Darwin headed for a 'rental crisis' as strong demand and limited supply push prices to near record levels

Budding gardener Danielle Buxton enjoys growing her own food in the shady, tropical backyard of the townhouse she rents in the Darwin suburb of Fannie Bay.

But after a $70 a week rent hike coincided with her former partner moving out, these days it isn't just enjoyment that keeps the single mother-of-one tending to her fruit and vegetable plants.

"We're trying to grow our own food because we need to," she says.

"I don't have the luxury of going and buying whatever we want for whatever recipe we need — it's more about what's the cheapest foods that we can buy that are still healthy."

Rents have risen steeply across the country since international borders reopened last year, just as other cost of living pressures began to escalate. 

But the hikes are hitting particularly hard in Darwin, which has become one of the most expensive Australian capitals to rent in.

With a median rent of $613 for houses and $500 for units as of November, the remote city trails only Canberra and Sydney when it comes to cost.

For Danielle, it means growing her own food and buying items on special at the supermarket aren't the only sacrifices she's had to make in the past few months.

The 37-year-old has returned to part-time work earlier than planned — giving up valuable time with her three-year-old son — and cut out all non-essentials, including deferring her online studies because she can't always afford the internet. 

Even then, by the end of the week, she's only breaking even.

"We live week-to-week, day-to-day, really," Ms Buxton says.

"My pay goes to rent, food, bills, and sometimes it's not enough, and it doesn't stretch that far.

"Every week my bank balance goes back down to zero. Every week."

Rents on track to exceed record levels

Unlike Canberra and Sydney, rents in Darwin have risen off a low base. Just a few years ago, the average weekly rent was just $450 for houses and $360 for units.

Since then, prices have skyrocketed. 

According to Ray White chief economist Nerida Conisbee, Darwin rental prices are now approaching the record set during the mid-2010s economic boom sparked by the construction of the multi-billion dollar Inpex gas plant.

In 2014, median rents soared to a high of $651 a week for houses and $550 for units, pushing many territory residents into rental stress as waves of highly paid fly-in, fly-out workers flooded in from interstate. 

Darwin's current median rents are the highest the city has seen since then.

"They are getting up there, [and] they will get up there," Ms Conisbee says.

"What we're seeing with rental growth is quite similar to what we're seeing in Perth and Brisbane, where we are getting to a situation of a housing crisis for renters.

"So buyers are okay, people who own homes are okay, but if you are someone who's looking to rent or you need to find a new rental property, you are likely to find it quite difficult."

Head of tenants' advice at the Darwin Community Legal Service, Matthew Gardiner, says they've been contacted by renters facing increases of more than $100 a week.

With an almost three-month wait for emergency accommodation, Mr Gardiner says the pressure is pushing some people to the point of leaving the city.

"[Some] people who ring up, they basically are looking at moving interstate, because there's nothing left here and they can't continue to stay here if there's nowhere to stay," he says.

"It's really desperate times."

For renters wanting to remain in the city, he says competition is intense.

Darwin's vacancy rate is sitting at 0.9 per cent, according to Domain, having risen from a rate of just 0.5 per cent at several points in the past few years.

"It's not unusual to see 60, 70 people turn out to an open house just to see a tenancy," Mr Gardiner says. 

"We've almost gotten to a stage where there's rental bidding — where [a place] will be advertised at one rate, but someone will offer a higher rate to actually get that tenancy." 

As rents continue to rise across Darwin, Ms Buxton fears she's being priced out of the market.

She says if the cost of renting keeps increasing, she could soon "have no choice" but to move to Darwin's outskirts or even interstate.

"I don't want to have to move out to ... somewhere cheaper and then disconnect myself from the community and the support network that I do have here," she says.

"But it's going to get to the point eventually where I probably will have to do something like that — or move home to Melbourne."

Surging demand meets limited supply

With a transient population, demand for rental properties has always been particularly strong in Darwin.

That demand has only risen in the past few years as the city's population jumped during the COVID pandemic — growing by more than 3,000 between 2016 and 2021, according to Census data — and rising interest rates drove up the cost of mortgages.

But one of the biggest issues has been the city's shortage of available housing.

Darwin's vacancy rate dropped from four per cent to below one per cent during 2020, where it has remained for most of the past two years.

But despite the low availability of properties, there's been few new builds as developers and investors steer clear of a city known for its boom-bust economy. 

"[Investors] are just not in the market now," Darwin real estate Glenn Grantham says.

"They're so shy of investing in the Northern Territory because of the way they were burnt at the end of the Inpex boom."

The few new major housing developments that have been put forward have faced opposition from the government or community. 

Days out from the 2020 election, the NT government rejected a rezoning bid for more than 100 high and medium-density units just outside Darwin's CBD.

The same year, a proposed village in Darwin's rural area, including more than 4,000 new homes, was also knocked back. It now forms part of the government's "infrastructure plan and pipeline".

Both projects were scrapped largely due to community backlash, while an 800-house defence development at Lee Point has also been the subject of heavy scrutiny

"Elsewhere in Australia — in Sydney and Melbourne particularly — there have been a lot of property investors buying lots and lots of apartments and lots of houses, so it has kept rents a little bit more stable and hasn't pushed them up as high," Ms Conisbee says.

"But somewhere like Darwin, we just haven't had enough investors in the market to really allow for the continued supply of rental housing that's being required."

Little relief in sight for renters

Based on current outlooks, the situation is only set to worsen.

The NT government is seeking to grow the territory's economy to $40 billion by 2030.

To achieve that, there are a host of new projects in the pipeline — in gas, defence, renewable energy and more — many of which will need large numbers of workers.  

The Northern Territory government has also spoken of plans to boost the NT's population from about 250,000 to 300,000 by 2030, a 20 per cent increase.

Mr Grantham says those targets, combined with the trajectory rents are already on, means there is an urgent need for more housing in Darwin before prices spiral further.

"When [the available housing] is taken up, what you've got is ... a rental crisis, where you have no properties available for rent," he says. 

"Probably in the next six months, if we start to get the influx of population required for these infrastructure and projects that are moving forward and signed off, we'll be in that rental crisis."

But Ms Buxton says the situation has already become unsustainable for people like her.

"It takes a toll in other ways than just financially because you have to always be thinking about it," she says.

"I feel like I'm always catching up."

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