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Darwin has lagging behind for so many years now. Is 2025 the year it finally shapes up and starts some serious price growth? What does data say? In this episode, I'm going to walk you through the trends myself and the InvestorKit team has picked up in Darwin, as well as the pros and cons of investing in Australia's most regional capital city. I'm Junge Ma, lead research analyst here at InvestorKit.
Let's get into it. So, is Darwin going to boom or to start growing in 2025? Let's first look at the trends and then I'll tell you more about the pros and cons investing in Darwin. In trends, let's talk about the job market first. Good news is the job market in Darwin is looking active now.
The unemployment rate here now is around 3. 6%. It is down from over 6% back in 2020. And since early 2024, this number is actually trending downward. And as we can see now, there's a lot of infrastructure improvements and development activities happening in Darwin to support the local job market as well.
And the second trend we picked up is the decline in number of listings or the supply level and the increase in number of sales. Darwin's house number of listings has been trending downward sharply since mid-2024. And at the same time, the number of sales has been increasing gradually. Now the house inventory level should be around 3. That is a quite healthy level.
But one thing I want to point out here is that the increase in number of sales is mainly contributed by investors. Now the investor lending activity in Northern Territory is 39% higher than the last five-year average. And we all know Darwin is the primary property market in Northern Territory. So this 39% increase should be in line with Darwin's. But at the same time, the owner-occupier lending activity has actually decreased by 18%.
So we can say now investors are much more active than the owner-occupiers in the Darwin property market. To give that some context, Queensland's investor lending activity is now 40% up compared to the last five-year average. And South Australia, another hotspots market now, the investor lending activity is 36% higher than the last five-year average. So we can see the investor activity in Northern Territory is actually in line with some of the most hot property markets across the country. And the next point I want to talk about Darwin's supply level, its position in the long term.
Darwin's house prices declined from 2016 to 2020. That decline was one because of the poor population growth and the economic performance. And another reason for that decline could be very well because of the high supply level. From 2015 to 2020, those five years, we saw a large amount of new houses coming onto the market. And as population recovered after 2018-2019, the large amount of supply gradually got absorbed by the new residents.
In 2021, as the number of supply dropped by 30 or 40% from the peak, Darwin saw its first material growth in many years, rising from 460,000 something to around 570,000. In the past three years, while the house prices didn't grow much, we didn't see much house construction activities either. So now, further supply is tightening up further. We believe at least the supply level is at a good position to further push the prices to grow. In the next trend, we are looking at is the days on market.
As supply tightens, as number of sales goes up, we are seeing days on market decline since early 2024. At this moment, days on market for Darwin's house market is still above 80 days, much higher compared to the hot spot markets like Perth, Brisbane or Adelaide, but it is moving towards the right direction and it is one of the signs for an early adopter market in InvestorKit's market categorization. Then the last trend we are looking at is on the rental market, the vacancy rate. Vacancy rate has decreased a lot in 2020 and 2021. Since then, it has increased slightly over years, but now it has dropped again back to the under 1% range.
That seems like a very tight rental market. However, with a tight rental market, we are not seeing really high rental growth in the past two years, only 10% growth in total since early 2023. That is not because the rental market pressure is low. It's mostly because of the affordability restrictions because Darwin's rental prices increased by 30% plus from the year of 2021 to the end of 2022. So now further rental growth is restricted by the local residents affordability.
It is actually a good sign for house sales price growth as more investors will be attracted by the high rental prices or rental yields and more renters will be squeezed out of the rental market because of the high rents they're paying and choose to finally buy their own owner occupying home. So that would be a stimulate for the demand on the sales market in Darwin. So data is saying that market trends in Darwin is going towards a good direction. Job market is active, supply level is going down, demand is going up, evidenced by lowering days on market and low vacancy rates. So now or in 2025, is it a good time for you to invest in Darwin?
Let's have a look at some of the pros and cons in investing in Darwin. Pro number one, the favorable cycle position. Darwin's long-term growth in the past 10 to 20 years has been bad. The last 10 year total growth was just 0. 5%, basically no growth.
And that is compared with the national average of around 6%. And if we look longer back, the last 20 year total growth was 4. 6%, not as bad now, but that is still lower than the national average of around 5. 5%. So with the increasing market pressure here, it is obviously at an early stage of its next growth cycle.
So if you are looking at entering a market at this position of its market cycle, Darwin could be an option. And pro number two is the high yield. Currently, the rental yield for houses is 6. 2%. And it is still going up because of the stagnation in sales price and the growth, although it's not too fast, in rental prices.
And 6. 2% is no doubt the highest among all capital cities. And also it is higher than some of the high yield cities in North Queensland, like Townsville, Rockhampton, Mackay or Gladstone. So it is really attractive for investors who are after high cash flow. Now we're talking about cons, what you should be careful about.
Number one is it's not as balanced economy. Darwin's local economy is more heavily reliant on mining and construction. If we look at Darwin's top five contributors to the total output of the local economy, mining is the top 20% of the total output. Construction is the second 15. 7% of the total output.
And then there's public administration and safety that includes the defense industry. And then there comes manufacturing and healthcare and social assistance. And now everyone knows that Perth or WA is heavily mining reliant. Then how about the top five contributors of Perth's output? Number one, construction 13% and mining comes the second also around 13%.
Those two are both much lower than Darwin's mining and construction contribution. Something positive about Darwin's economy is that we are seeing a lot of projects in non-mining industries happening, contributing to both the job market and the economy output. Some of the largest projects include the 2024 Integrated Investment Program, where $14 to $18 billion will be injected to the defense industry to bolster Australia's northern bases. And there are multiple renewable energy projects as well, including the $15 billion Desert Bloom Hydrogen Project, the $1. 5 billion Middle Arm Sustainable Development Precinct, and the $30 billion Australia-Asia Power Link Project, and so on.
So Darwin's economy is getting more and more balanced, but there's a long way to go. It takes time. And the next con is about population. Historic data shows that Darwin's house market growth is strongly correlated with its population growth rate. The last time we saw Darwin's property market boom was in the 2000s, when population was really high and internal migration as well was high.
Now Darwin's population growth has been increasing over the last two to three years, but it is still at a relatively low level compared to where it was five, 10 years ago. And at the same time, internal migration has been trending downward since 2020. Personally, I would have more confidence in Darwin's property market when the population and internal migration see more increase. So to conclude, we are seeing some good trends in Darwin right now. And if you are an experienced investor who would like to take advantage of Darwin's relatively early cycle position and the high rental yield, it could be a good option for you.
But if you're concerned about Darwin's not so balanced economy and the relatively weak population growth and the risks coming beside them, Darwin may not be a good option for you. So if you've been considering investing in Darwin, maybe attracted to the high yield, but a little concerned that it hasn't grown for so long, I hope this episode has given you the data to understand Darwin's position at this moment. And if you have any Darwin-related data questions, pop in the comments below or reach out to the InvestorKit team. It's not just me who likes talking about property data. I'm Junge Ma, lead research analyst at InvestorKit.
I'll see you on another episode.
