Rentvesting is on the rise thanks to the nation's continued housing shortage, spendy cost of living and rising property prices. And Darwin might be the best option for first-time buyers hoping to jump onto the property ladder.
According to a new report by Ubank, the median mortgage rate is cheaper than renting in 85.7% of Darwin's suburbs, which has no doubt propelled many to buy. The formula is simple: buy an investment property in a more affordable area, rent it out and then live in another area by renting.
But would-be buyers and investors need to move quickly if they want to secure the best deals.
In fact, Janine Ashmore, cofounder and director of Darwin-based Bliss Home Loans said the city's rentvesting and property investing market has been on overdrive, for at least the last 12 months.
"It's been brutal," Ashmore told Australian Broker. "It started in the housing market. Houses anywhere from $400,000 to $550,000. And then that market just got really busy. And then in the last six months, we've seen it progress to the unit market, which up here has been stagnant, probably for the five years prior to that. And then in the last six months, that's just gone nuts as well. So it's really, really busy at the moment.
"Everyone from all levels, including investors, have been coming up here and buying stock," she said. "If something is listed, it's gone in less than 24 hours, generally at the cheaper end of the market, which makes it hard for first-time buyers. We're finding people down south rentvesting rather than buying something for themselves [down south], because it's just out of their reach."
Nationwide, home loans from first-time homebuyer investors rose 12% in 2024, year-over-year, according to the Australian Bureau of Statistics (ABS). A different survey by National Australia Bank, the NAB Behavioural Economics data found that younger Australians, aged 26 years old to 35 years old, are 10% more likely to rentvest, thanks to competing desires to both own and live in a city of their choice.
"As inner-city home prices have risen, this approach has become more popular, particularly among younger buyers," said Eliza Owen, head of research at Cotality.
“Initially, it might seem counterintuitive to pay both rent and a mortgage, but it depends on an individual or couple’s budget, life stage and desired lifestyle," Owen said. "Rentvesting can offer the best of both worlds, allowing [borrowers] to purchase a property and rent it out to cover some or all of their ownership costs while continuing to rent the home where they live."
In the case of Darwin, much of the city's growth can be attributed to a booming local economy, lower unemployment levels, new infrastructure projects and higher yields.
In September 2024, Darwin's gross rental yields were reported at 6.1% for houses and 7.3% for units, up from 5.9% and 6.9%, respectively, the prior year, according to PropTrack data. In contrast, the national average for house rental yields was roughly 3.8%.
"We're in a growth phase," Ashmore said. "All the valuers are talking about housing shortages and all the projects that are coming up [in the Northern Territory], and it's just really, really positive. There's a lot of employment opportunities [in the Northern Territory]. And generally speaking, the wages are higher to attract people to come here.
"And the dry season, without a doubt, attracts people up here because the weather is glorious," she added. "And it's close to Asia, which is always attractive too. It's easy to get there, only a couple hours away. I think we've got a good 10 years ahead of us at this point."
There are also government incentives aimed at boosting regional property investments that are helping drive momentum.
The Northern Territory's HomeGrown Territory Grant extends the First Home Owner Grant (FHOG) to provide $10,000 for first-home buyers purchasing an established home. The HomeGrown Territory Grant offers $50,000 for first-home buyers to put towards building or buying their first home. And the FreshStart New Home Grant gives eligible Northern Territorians a $30,000 grant to build or buy a brand new home that they will live in for 12 months. (The program ends Dec. 31, 2025.)
"There are good incentives to try and get people to move up here, because they need the labour," Ashmore said. "So we've got a lot of that going on at the moment.
"But people have to be ready," the regional broker continued. "If they're not ready, they're going to miss out. If borrowers see a property and they like it, they just have to offer straight away. They can't go around and, like they used to 12 months ago, and go and talk to mum and dad, and discuss it and bring people back for several inspections, because they'll just miss out. Someone else will jump in and buy it."
