Latest / 360 with Katie Woolf / Core Logic Head of Residential Research Australia Eliza Owen says house prices values in Darwin have fallen gradually over the last 5 months following several consecutive rate hikes

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Core Logic Head of Residential Research Australia Eliza Owen says house prices values in Darwin have fallen gradually over the last 5 months following several consecutive rate hikes · 360 with Katie Woolf

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  Speaker 1: Well, joining me on the line right now is call
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  Speaker 1: Logic's head of residential Research for Australia, Eliza Owen.
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  Speaker 2: Good morning to you, Eliza.
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  Speaker 3: Good morning, Thanks for having me, well.
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  Speaker 1: Thank you for coming on a little bit earlier than expected. Now, Eliza,
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  Speaker 1: we know that core Logic has released their most recent
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  Speaker 1: data which looks at the housing market around Australia and
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  Speaker 1: it shows the home price index fell zero point one
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  Speaker 1: percent nationally in February.
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  Speaker 2: Talk us through what else it found.
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  Speaker 3: Yeah, so this was a pretty surprising month because we've
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  Speaker 3: got more interest rate rises and probably a looser labor
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  Speaker 3: market on the horizon for twenty twenty three, and yet
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  Speaker 3: property price balls really narrowed over the month of February,
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  Speaker 3: and it was led by an increase in the Sydney
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  Speaker 3: housing market, which increased zero point three percent, the first
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  Speaker 3: increase since January last year. For Darwin, we all saw
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  Speaker 3: a bit of a slow down in the pace of declines,
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  Speaker 3: values for down point three percent over the month, a
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  Speaker 3: little bit more than what we saw in jan but
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  Speaker 3: less than what we saw towards the end of twenty
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  Speaker 3: twenty two, where the monthly decline was averaging abou zero
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  Speaker 3: point four percent.
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  Speaker 1: Now, how are those house prices looking across Australia as
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  Speaker 1: those interest rates continue to rise, and I guess specifically
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  Speaker 1: for us here in the Northern Territory.
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  Speaker 3: So we've seen a pretty strong reaction in some housing
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  Speaker 3: markets and not quite as strong a reaction in others.
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  Speaker 3: So the downturn nationally is sitting at about nine percent
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  Speaker 3: from a peak in April last year. We've seen property
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  Speaker 3: prices in Sydney kind of lead the decline, down about
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  Speaker 3: thirteen and a half percent overall, but really price falls
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  Speaker 3: across Darwin have been very miles so we've only seen
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  Speaker 3: really five months of decline since rates started hiking, and
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  Speaker 3: that has been a pretty mild decline even on that
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  Speaker 3: monthly basis, so averaging point four percent declines towards the
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  Speaker 3: end of the year, just zero point three percent in
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  Speaker 3: the latest months, and overall property prices are still up
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  Speaker 3: about three percent over the past year. Looking to regional
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  Speaker 3: nt it's a similar situation. The rest of the territory
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  Speaker 3: has seen again an increase over the year at about
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  Speaker 3: six percent, and price fools haven't really been coming through
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  Speaker 3: in the outback of the territory. If anything, we've still
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  Speaker 3: seen values up another one and a half percent over
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  Speaker 3: the past month, a bit of a drop off in
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  Speaker 3: smaller attached dwellings, but standalone houses are still going quite strong.
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  Speaker 1: And Eliza, why do you think that the Northern or
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  Speaker 1: or indeed Darwin is bucking the trend of what we're
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  Speaker 1: saying nationally.
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  Speaker 3: I think it comes back to price points. A lot
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  Speaker 3: of this downturn is being driven by interest rate rises,
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  Speaker 3: So the more expensive property values are, the more sensitive
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  Speaker 3: they're going to be to changes in the cost of debt.
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  Speaker 3: So the Sydney market, where dwelling values are falling at
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  Speaker 3: their fastest level, your price point for a median dwelling
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  Speaker 3: is still at around a million dollars. Compare that with Darwin,
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  Speaker 3: where dwelling values at the median level are sitting at
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  Speaker 3: about four hundred and ninety five thousand. That's actually the
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  Speaker 3: most affordable price point of the capital city market. It
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  Speaker 3: means you don't need to take out as much debt
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  Speaker 3: to finance a home across Darwin, and so interest rates
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  Speaker 3: potentially don't have as much.
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  Speaker 1: Of an impact Weliza, as those interest rates do continue
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  Speaker 1: to rise. So right around Australia, I mean, how do
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  Speaker 1: you think that is going to impact the housing market
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  Speaker 1: across the board as people do get into I guess
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  Speaker 1: more mortgage stress as those rates go up.
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  Speaker 3: Yeah, So it's a bit of a mixed bag for
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  Speaker 3: twenty twenty three because on the one hand, we've got
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  Speaker 3: returning overseas migration, which is especially good for areas like
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  Speaker 3: the territory where you have a lot of tourism. You
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  Speaker 3: have people coming from overseas to work on resources projects
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  Speaker 3: and things like that. You've also got a relatively tight
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  Speaker 3: rental market fill where rent values have increased around twenty
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  Speaker 3: six percent across Darwins since the onset of the pandemic.
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  Speaker 3: But then, as you say, we've got rising interest rates,
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  Speaker 3: which typically has downward pressure on property prices. And we've
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  Speaker 3: also got a high portion or relatively high portion of
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  Speaker 3: mortgage holders who are going to come off their fixed
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  Speaker 3: terms this year, some of which have secured at these
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  Speaker 3: fixed mortgage terms of less than two into a variable
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  Speaker 3: rate environment of five to six percent. So because people
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  Speaker 3: are going to be having to pay a lot more
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  Speaker 3: interest on their debt, you might see at least the
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  Speaker 3: margins some households not being able to keep up with that,
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  Speaker 3: and maybe they will have to sell their home, I says,
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  Speaker 3: the margins because they don't think that's going to be
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  Speaker 3: a mass kind of situation. People can do a lot
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  Speaker 3: before they have to sell.
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  Speaker 2: Yeah, and I guess that's what's happening, isn't it.
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  Speaker 1: A lot of people are sort of just raining in
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  Speaker 1: their spending and making sure that they're saving money in
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  Speaker 1: other ways. Yeah, so they don't get in that situation.
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  Speaker 3: That's right. And we also find that banks can do
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  Speaker 3: a lot to try and keep roofs over people's heads
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  Speaker 3: as well. So, for example, at the onset of the
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  Speaker 3: COVID period, we saw the banks implement these mortgage repayment deferrals.
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  Speaker 3: So we know already that some of the banks are
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  Speaker 3: working with customers to say, well, for now, why don't
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  Speaker 3: you just go to inter only payments, or maybe you
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  Speaker 3: can rent out a room or extend the term of
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  Speaker 3: your home own. So there's all sorts of things that
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  Speaker 3: banks can try and do to avoid further stress in
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  Speaker 3: the housing market as well.
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  Speaker 2: Yeah.
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  Speaker 1: Well, Eliza Owen, the core Logic head of Residential Research
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  Speaker 1: for Australia, We always appreciate your time, particularly this morning,
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  Speaker 1: calling through a little bit earlier for us.
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  Speaker 2: Thank you so much, no.
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  Speaker 3: Dramas at all. Thank you for having me in take care.
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  Speaker 2: Thank you