Latest / 360 with Katie Woolf / Real Estate Institute of the NT’s Aswin De Silva explains how the RBA’s latest rate rise will impact the housing market

Transcript

Real Estate Institute of the NT’s Aswin De Silva explains how the RBA’s latest rate rise will impact the housing market · 360 with Katie Woolf

• 0:00
  Speaker 1: We do know that interest rates in Australia have risen
• 0:03
  Speaker 1: to a nine year high, putting extra pressure on mortgage holders,
• 0:06
  Speaker 1: and the cash rate has risen by a quarter of
• 0:09
  Speaker 1: the percent yesterday, which is lower than what was expected.
• 0:13
  Speaker 1: Now the Reserve Bank is warning that soaring inflation will
• 0:16
  Speaker 1: lead to further increases. To tell us more about the
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  Speaker 1: impacts is Aswhend Silver from the Real Estate Institute of
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  Speaker 1: Australia's Northern Territory branch. Good morning to you, Aswen.
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  Speaker 2: Good morning to your kid. How are you?
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  Speaker 1: Yeah, really well, thank you so much for your time. Now, asmen,
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  Speaker 1: what was your reaction to the latest interest rate rise?
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  Speaker 2: Yeah, you were You are correct. We were expecting a
• 0:40
  Speaker 2: fifty basis point in case twenty five from that perspective
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  Speaker 2: was good. But going forward that cash rate is expected
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  Speaker 2: to reach three point three five by December January twenty
• 0:58
  Speaker 2: twenty three, in line with inflationary increases expected from the
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  Speaker 2: current six point one to seven percent, but saying that
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  Speaker 2: the rental years with that increase will be under pressure
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  Speaker 2: obviously because particularly from first term bias point of view,
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  Speaker 2: their ability to access funding from banks will reduce. With that,
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  Speaker 2: the vacancy rates also could come down.
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  Speaker 1: And so I mean, I guess you've pointed to a
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  Speaker 1: bit of it there, But how do you think that
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  Speaker 1: then that is going to sort of impact us here
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  Speaker 1: in the Northern Territory and impact mortgage holders.
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  Speaker 2: It will have an impact on the mortgage holder, particularly
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  Speaker 2: the mortgage holders who are currently on a variable rate.
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  Speaker 2: The people who have fixed the rate won't have an
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  Speaker 2: impact up until the fixed contract ends be SEP particularly
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  Speaker 2: as I told you first first entrance to the market,
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  Speaker 2: the younger folks, because their ability to access funding will
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  Speaker 2: be that much more limited unless we get the apartments,
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  Speaker 2: the units construction going. We have had challenges, the construction
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  Speaker 2: costs have have the increase, We have had supply chain issues,
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  Speaker 2: they have been labor issues. So it's a whole gamut
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  Speaker 2: of things needs to be addressed sooner rather than later.
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  Speaker 1: And as from what are you finding in the territory
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  Speaker 1: at the moment, like, as these mortgage rates change and
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  Speaker 1: as they increase, what are you finding that it's sort
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  Speaker 1: of doing here in the territory when it comes to
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  Speaker 1: the housing market.
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  Speaker 2: Well, the median house prices, we have thus far come
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  Speaker 2: out unscathed compared to all jurisdictions nationally primarily because of
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  Speaker 2: there have been corrections taking place from two thousand and
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  Speaker 2: fifteen onwards, whereas in other states the house pricing have
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  Speaker 2: been rapidly increasing. We were there was two volanteers we
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  Speaker 2: had in twenty twenty and twenty nineteen specifically, so we
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  Speaker 2: could see the median house prices that are currently at
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  Speaker 2: five hundred and ten thousand approximately, could see those medium
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  Speaker 2: prices coming down towards first cott and xt year.
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  Speaker 1: So they could be so obviously they could be. I'm
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  Speaker 1: assuming that it means that it could be a good
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  Speaker 1: thing for those that are wanting to enter the housing market.
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  Speaker 2: Correct correct as long as you get the timing right.
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  Speaker 2: But the only thing is if you're if you're looking
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  Speaker 2: at a financial institution, then you're borrowing at a higher rate.
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  Speaker 1: Yeah, And so as wean talk us through, then does
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  Speaker 1: it have an impact I suppose, like you know, on
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  Speaker 1: the I neither. It obviously doesn't impact those that are renters,
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  Speaker 1: but does it have sort of that flow on impact
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  Speaker 1: to the rental market as well more generally because there
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  Speaker 1: is that change to those that own their homes.
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  Speaker 2: Yeah, definitely will have an impact, particularly because as the
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  Speaker 2: yields go up currently it's at five point eight percent
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  Speaker 2: for a two bed unit and about five point one
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  Speaker 2: for three bed housing. When the yields go up, the
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  Speaker 2: rental market will be under stress and the rentals will
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  Speaker 2: go up unless we have the constructions going the supply
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  Speaker 2: in line with the demand.
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  Speaker 1: So as what's the message I mean at the moment,
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  Speaker 1: I guess everybody can see what's going on with the
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  Speaker 1: mortgage right everybody knows that it's pretty tough going if
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  Speaker 1: you've got a mortgage and your interest rates are variable.
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  Speaker 1: But then what's the message I suppose for the government
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  Speaker 1: or for the powers that be? You know, when it
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  Speaker 1: comes to the housing market. Right now, we understand the
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  Speaker 1: mortgage rates are changing, but by the sounds of it,
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  Speaker 1: the cost to construct a new home is going up.
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  Speaker 1: It's getting tougher and tougher for people to enter the
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  Speaker 1: housing market.
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  Speaker 2: Yeah, So basically, from a housing wearying point of view,
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  Speaker 2: we need to fast track some of these plans where
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  Speaker 2: you have to have affordable housing, more affordable housing. We
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  Speaker 2: need to have the labor issues sorted out. It's easier
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  Speaker 2: said than done, is all term measures. Fast tracking is
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  Speaker 2: not easy. But government definitely has some plans in terms
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  Speaker 2: of looking at both development, looking at technology improvements. With that,
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  Speaker 2: hopefully there would be influx of people coming in. As
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  Speaker 2: that happens, the retail market could also boost, So we
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  Speaker 2: need to bear in mind how we cater to these
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  Speaker 2: people are coming in interstate. But saying that, if you
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  Speaker 2: really look at the population of NTY over the last
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  Speaker 2: ten years, it does not increased, so primarily because there's
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  Speaker 2: an offset coming the people live in the territory and
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  Speaker 2: going interstate. So from an economy point of view, it's
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  Speaker 2: very important that we retain the population here by creating
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  Speaker 2: employment opportunities and with that the infrastructure and housing is
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  Speaker 2: a definitely very important component of that infrastructure.
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  Speaker 1: Yeah, you spot on. I mean it's something that we
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  Speaker 1: talk about so often. Even when we talk about places
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  Speaker 1: like Catherine and retaining and getting teaching staff and for
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  Speaker 1: other different industries as well, housing is so often part
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  Speaker 1: of that discussion.
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  Speaker 2: Absolutely, Catherine Alice Springs is all included. Yeah, it has
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  Speaker 2: to be a broad based development taking place. So it's
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  Speaker 2: it's not a one singular thing that can impact housing.
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  Speaker 2: It's it's it's whole gamut of hole. There are lots
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  Speaker 2: of variables. Will we will come into play. Of course,
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  Speaker 2: as we started by talking about the interest rates, we
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  Speaker 2: need to keep an eye on the rates and possibly
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  Speaker 2: enter the market at the right time. There are some
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  Speaker 2: properties which are still going which at an affordable level comparatively,
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  Speaker 2: so timing what's what's in the interest rates up until
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  Speaker 2: about first quarter next year, if we are looking at
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  Speaker 2: another possibly a seventy five or a one hundred basis
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  Speaker 2: point increase, so we need to we need to, you know,
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  Speaker 2: keep an eye on all these variables.
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  Speaker 1: Yeah, one hundred percent. Well askwend Silver. I really appreciate
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  Speaker 1: your time this morning. Thank you so very much for
• 7:54
  Speaker 1: having a chat with us.
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  Speaker 2: Pleasure is all mine.
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  Speaker 1: Thank you.