Latest / 360 with Katie Woolf / CoreLogic’s Head of Research Eliza Owen says Darwin is the only capital city where house values haven’t started to decline

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CoreLogic’s Head of Research Eliza Owen says Darwin is the only capital city where house values haven’t started to decline · 360 with Katie Woolf

• 0:00
  Speaker 1: We know that property prices continuing to decrease around the
• 0:03
  Speaker 1: nation as higher interest rates hit some Aussies pretty hard,
• 0:07
  Speaker 1: and capital city housing markets have fallen by up to
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  Speaker 1: six percent in the past three months, and core Logic
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  Speaker 1: Stata shows that in September properties were sold for one
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  Speaker 1: point four percent less on average nationally than in August.
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  Speaker 1: So joining me on the line to tell us a
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  Speaker 1: little bit more about the situation is core Logic's head
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  Speaker 1: of research, Eliza Owen. Good morning to you, Eliza.
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  Speaker 2: Good morning, thanks for having me.
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  Speaker 1: Yeah, thank you so much for your time. Now, Eliza,
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  Speaker 1: how are things tracking around the nation at this point?
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  Speaker 2: Well, as you say, national home values did decline another
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  Speaker 2: one point four percent through the month of September, but
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  Speaker 2: it almost looks like the pace of decline slowed down
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  Speaker 2: a bit over the month. It's off the back of
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  Speaker 2: a one point six percent drop through August, and across
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  Speaker 2: the combined capital cities, we've seen auction clearance rates stable,
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  Speaker 2: even increasing a little bit on the winter months, and
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  Speaker 2: in terms of listings, it's been a really lackluster start
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  Speaker 2: to what would usually be a spring selling season, so
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  Speaker 2: vendors kind of holding up selling, which I think is
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  Speaker 2: insulating price calls as well.
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  Speaker 1: Yeah, right, so not as many people are sort of
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  Speaker 1: putting those homes on the market, or sellers aren't putting
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  Speaker 1: those homes on the market.
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  Speaker 2: Yeah, that's exactly right. So usually around this time of
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  Speaker 2: year we'd see about forty three thousand new listings flowing
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  Speaker 2: through over the month of September. It's actually close to
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  Speaker 2: to thirty four thousand through the past month. So what
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  Speaker 2: that suggests to me is because selling conditions aren't very good.
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  Speaker 2: It means that vendors aren't really selling if they don't
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  Speaker 2: have to, and that's actually leading this situation of kind
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  Speaker 2: of tight supply, which might be helping to slow the
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  Speaker 2: decline a little bit nationally.
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  Speaker 1: Yeah. Right now, as I understand it, the only capital
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  Speaker 1: city that didn't sort of witness a monthly for was Darwin.
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  Speaker 1: Why do you think that is they're.
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  Speaker 2: Quiet, Achieva. I think over the past couple of months,
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  Speaker 2: as we've seen pretty sharp alls in big expensive capital
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  Speaker 2: cities like Sydney and Melbourne, Darwin has been very resilient
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  Speaker 2: because of its relatively low price point. You've got a
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  Speaker 2: median dwelling value of about five hundred and ten thousand
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  Speaker 2: across Darwin at the moment, compared to medians of over
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  Speaker 2: a million across Sydney, a million dollars in median houses
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  Speaker 2: in Canberra and near that price point in Melbourne as well.
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  Speaker 2: So the more expensive market is, the more debt you
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  Speaker 2: have to take out to fund a purchase there, and
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  Speaker 2: the more it's impacted by interest rates. So I think
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  Speaker 2: between an affordable price point and those fewer new listings,
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  Speaker 2: it's held.
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  Speaker 1: Up Aliza, those you know, some of those median house
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  Speaker 1: prices are incredible. It really makes you wonder, you know,
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  Speaker 1: how it must it's going to be hard for that
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  Speaker 1: younger generation to sort of be able to enter the
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  Speaker 1: housing market at some point.
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  Speaker 2: Absolutely, and I think that's reflected in so much of
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  Speaker 2: the data we see around the housing market. You know,
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  Speaker 2: the level of first home buyer finance going out has
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  Speaker 2: dropped off rapidly since the introduction of a scheme like Homebuilder,
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  Speaker 2: which which helps a lot of people into new dwellings,
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  Speaker 2: and even things like the average age of a first
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  Speaker 2: home buyer is now thirty five years old. Wow, that's
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  Speaker 2: hardly what we associate with the young kind of millennial
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  Speaker 2: or gen z of approaching the property market. Journey. So
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  Speaker 2: I think the barriers to entry with those high price
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  Speaker 2: points are evident. And now you've got the compounding problem
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  Speaker 2: of higher mortgage rates, which is limiting borrowing capacity for
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  Speaker 2: first home buyers as well.
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  Speaker 1: Yeah, now speaking of those you know, of those interest rates,
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  Speaker 1: we are expecting that they could actually rise again tomorrow. Firstly,
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  Speaker 1: what impact are those interest rates having really on the
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  Speaker 1: property market right now? And what do you think we'll
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  Speaker 1: see if they do rise again tomorrow.
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  Speaker 2: So the immediate impact of a rate rise on the
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  Speaker 2: housing market is generally that they're inversely related. So as
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  Speaker 2: interest rates rise, property prices go down. That's both because
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  Speaker 2: borrowing capacity is reduced by it has become a little
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  Speaker 2: bit more uncertain, and in some instances, higher mortgage rates
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  Speaker 2: can trigger more selling decisions, although I don't think we're
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  Speaker 2: seeing that just yet. So with tomorrow's rate rise, you know,
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  Speaker 2: it's going to be hard for property prices to stabilize
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  Speaker 2: or recover in that circumstance. I don't think it's until
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  Speaker 2: we see a pause in rate rises, which could be
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  Speaker 2: in twenty twenty three, that will really get to that
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  Speaker 2: kind of bottoming out in housing market conditions.
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  Speaker 1: Yeah, right now, laza. Is it just houses or is
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  Speaker 1: this also impacting unit sales as well? Yeah?
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  Speaker 2: Great question. So both houses in units are seeing softer
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  Speaker 2: buying conditions. At a national level, across Darwin, we did
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  Speaker 2: see unit values tick a little bit lower over the month,
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  Speaker 2: so zero point three percent lower, where house values were
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  Speaker 2: pretty flat. But broadly on a national scale, what you'd
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  Speaker 2: expect to see is that more expensive dwelling markets would
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  Speaker 2: be more sensitive to rate rises and that's why on
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  Speaker 2: a national level we've generally seen steeper declines in the
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  Speaker 2: detached house segments than we having units. And it's possible
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  Speaker 2: that as rates rise, people pivot towards units more anyway,
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  Speaker 2: because it's more affordable when your borrowing capacity is limited. Yeah.
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  Speaker 1: Now, I know, obviously Darwin's a capital city, but some
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  Speaker 1: would consider it more regional. I mean, are we seeing
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  Speaker 1: other regional locations rise in price as well, or how
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  Speaker 1: are things going in more regional parts of Australia.
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  Speaker 2: So regional Australia had a bit of a sustained upswing.
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  Speaker 2: It didn't really come into decline until about June, whereas
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  Speaker 2: the capital city market started falling in value through apor. However,
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  Speaker 2: now that the regional market is in a down swing.
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  Speaker 2: It's kind of keeping pace with the down swing in
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  Speaker 2: the capital cities. Even over the month of September, as
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  Speaker 2: we saw a one point four percent decline in capital
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  Speaker 2: city home values, we'vein a one point three percent decline
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  Speaker 2: in regional values. So regions are certainly not immune to
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  Speaker 2: rate rises. I think it's just more the further afield
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  Speaker 2: or affordable markets that have been a little more resilient
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  Speaker 2: in the past few months.
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  Speaker 1: Well, it's really interesting. I think it's going to be
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  Speaker 1: you know, it is going to continue to be interesting
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  Speaker 1: to see where it all sort of lands. As you
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  Speaker 1: touched on, you know, with those interest rates, it has
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  Speaker 1: an impact on different types of properties. I know for
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  Speaker 1: us here in Dall and you know, people wondering, I
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  Speaker 1: guess what is going to happen, and only time will
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  Speaker 1: tell I suppose.
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  Speaker 2: Yeah, that's right. And remember when it comes to your
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  Speaker 2: property decisions, it's got to be based on your individual circumstances.
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  Speaker 2: Don't worry about trying to time a property purchase to
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  Speaker 2: the cycle, because that's impossible, right, Yeah. I think just
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  Speaker 2: looking out for properties that you can afford, that you
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  Speaker 2: can afford in the case of further rate risers. That's
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  Speaker 2: the kind of question you need to be asking yourself
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  Speaker 2: right now.
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  Speaker 1: Yes, that is a very good point to make, I think,
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  Speaker 1: Eliza Owen, core Logic's head of research, we really appreciate
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  Speaker 1: your time this morning. Thanks so much for chatting with
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  Speaker 1: us anytime.
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  Speaker 2: Take care.
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  Speaker 1: Thank you,