Latest / 360 with Katie Woolf / CoreLogic Research Director Tim Lawless says house values in Darwin dropped slightly in October, the first month on month decline since interest rates began to rise

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CoreLogic Research Director Tim Lawless says house values in Darwin dropped slightly in October, the first month on month decline since interest rates began to rise · 360 with Katie Woolf

• 0:00
  Speaker 1: We do know that the latest figures are in for
• 0:02
  Speaker 1: the housing market with values continuing on a downward trend.
• 0:06
  Speaker 1: To shed some more light on how the territory market's performing,
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  Speaker 1: Tim Lawlers from core Logic, the core Logic Research director,
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  Speaker 1: joins me on the line right now. Good morning to you.
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  Speaker 2: Tim, good Akta, good morning.
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  Speaker 1: Great to have you on the show. Now, Tim, what
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  Speaker 1: do the figures show for the housing market for Darwin.
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  Speaker 2: Well, Darwin's been a little bit different than most of
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  Speaker 2: the other markets, which isn't anything out of the normal.
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  Speaker 2: We do tend to see Darwin quite kind of cyclical.
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  Speaker 2: The values were down a little bit through October, they
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  Speaker 2: were down zero point eight percent, but this was the
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  Speaker 2: first month of month's decline and values we've seen since
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  Speaker 2: interest rates started a rise. Most of the capital cities
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  Speaker 2: have been on a fairly consistent downwards trend. So Hobart,
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  Speaker 2: you know, there's a few factors that are I guess
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  Speaker 2: helping the prices up around the sheer affordability of the market. Yep,
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  Speaker 2: we've got a typical price in Darwin about five hundred
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  Speaker 2: and eight thousand dollars for a dwelling somewhere like Sydney
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  Speaker 2: and it's more than a million dollars still, even a
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  Speaker 2: smaller market like say Adelaide at six hundred and fifty
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  Speaker 2: five thousand dollars for a medium So I think a
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  Speaker 2: lot of this resilience, if you will, has to do
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  Speaker 2: it this year. Affordability of Darwin, along with other things
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  Speaker 2: like you know, positive population growth, a return of migration.
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  Speaker 2: Rental markets are still quite strong, which is the diverting
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  Speaker 2: demand into housing, the purchasing homes, that type of thing
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  Speaker 2: as well.
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  Speaker 1: Yeah, right, so while we are, while we're not facing
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  Speaker 1: the same decreases as other states, as you pointed out there,
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  Speaker 1: those median house prices here in the territory are lower
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  Speaker 1: than what they are in those other major capital cities.
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  Speaker 2: Yeah, that's exactly right, and I think that's one of
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  Speaker 2: the reasons why the market is somewhat insulated. When you
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  Speaker 2: think about the major impact of higher interest rates is
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  Speaker 2: reducing borrowing capacity, and it seems to be impacting on
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  Speaker 2: markets where housing is much more unaffordable, like Sydney or
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  Speaker 2: Melbourne or Brisbane for example, are recording large falls. Darwin
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  Speaker 2: doesn't really have the same impact. Household balance seats arguably
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  Speaker 2: aren't quite as stantly stretched which makes the sector or
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  Speaker 2: the household sector much less sensitive to higher interest rates.
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  Speaker 1: Talk me through you know the impact that those high
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  Speaker 1: interest rates are having right around Australia right now.
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  Speaker 2: Well, the major impact that I mentioned is reducing borrowing capacity,
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  Speaker 2: but think about existing borrowers as well, obviously having to
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  Speaker 2: pay more on their debt servicing. So most Australian borrowers
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  Speaker 2: are on a variable rate. So we've seen variable mortgage
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  Speaker 2: rates move from about two point four percent getting up
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  Speaker 2: towards for the five percent mark now, so roughly doubling,
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  Speaker 2: and they're set to rise even further. So for a
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  Speaker 2: typical household that may have say seven hundred and fifty
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  Speaker 2: thousand dollars of debt, they're generally paying about one thousand
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  Speaker 2: dollars more a month now than what they were pre
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  Speaker 2: rate hikes. Again, Darware, not not quite as severe. Average
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  Speaker 2: loan sizes are smaller because of the better affordability vision,
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  Speaker 2: so not really seeing as much of an impact in
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  Speaker 2: the household sector.
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  Speaker 1: In that market, Tim, Do you have much detail when
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  Speaker 1: it comes to the more regional parts of the Northern
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  Speaker 1: territory as well, or is this latest start and more
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  Speaker 1: so over the capitals.
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  Speaker 2: No, no, we break the market down pretty much everywhere.
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  Speaker 2: So if you look at markets like say the broader
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  Speaker 2: outback region of the Northern Territory that includes Alice Springs, Yeah, Barkley,
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  Speaker 2: those sort of areas, so Alice Springs a little bit
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  Speaker 2: more resilient. We saw values holding firm through October. They're unchanged,
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  Speaker 2: but over the past twelve months, market's up about four
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  Speaker 2: point seven percent. There Catherine has been the better performer.
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  Speaker 2: We saw Catherine housing values increase by eight point eight
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  Speaker 2: percent over the past twelve months. That's actually the best
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  Speaker 2: performing subregion of the Northern Territory over the past year.
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  Speaker 2: But each of these subregions are still seeing either values
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  Speaker 2: stabilizing now or starting to trend a little bit lower. Yeah.
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  Speaker 1: Right. And it's interesting because then we talk about the
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  Speaker 1: likes of through at different times and about the housing
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  Speaker 1: shortage that there is, you know, when we're trying to
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  Speaker 1: sort of lure workers to different sectors, still a place
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  Speaker 1: like Catherine, and then to hear that the housing market values,
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  Speaker 1: you know, I've had an increase or not changed much.
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  Speaker 1: It kind of makes sense, I.
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  Speaker 2: Guess, yeah, it does. And there's still quite a significant
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  Speaker 2: affordability advantage to a lot of those regional or more
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  Speaker 2: remote areas of the MT as well, Catherine, really good
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  Speaker 2: example typical value of a home there's about three hundred
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  Speaker 2: and sixty five thousand dollars compared to the broader dal
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  Speaker 2: and just over five hundred thousand, So it is much
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  Speaker 2: cheaper to live in these more regional markets of the territory.
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  Speaker 2: But again, as you say, it comes down to both
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  Speaker 2: desirability as well as having a job. It's just stoking
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  Speaker 2: labor markets and these areas is also really important.
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  Speaker 1: Tim. I know you don't have a crystal ball, but
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  Speaker 1: are we expecting these prices to sort of continue on
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  Speaker 1: that downwards you know, downwards trajectory, and we've got those
• 5:00
  Speaker 1: interest rates going up so high.
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  Speaker 2: Well, clearly higher interest rates are a net negative for
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  Speaker 2: housing demand. We are expecting there probably will be further
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  Speaker 2: declines around the country as well as in Darwin and
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  Speaker 2: broadly the NT, but we are expecting interest rates will
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  Speaker 2: hopefully be approaching a peak over the coming months. It's
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  Speaker 2: almost guaranteed we'll see another rate hike in December. Then
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  Speaker 2: the RBS board takes a break in January, so the
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  Speaker 2: next meeting will be in February. After the December meeting,
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  Speaker 2: and we could see another rate hike then as well,
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  Speaker 2: but hopefully that's taking us to around the limit. Once
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  Speaker 2: interest rates to stabilize, then that's when we could start
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  Speaker 2: to see some stability returning to housing markets. Well.
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  Speaker 1: Tim Lawless, Core Logic Research Director, I always appreciate your time.
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  Speaker 1: Thanks so very much for having a chat with us
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  Speaker 1: this morning.
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  Speaker 2: Thanks Katie, always good to chat.
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  Speaker 1: Thank you.