Latest / 360 with Katie Woolf / CoreLogic’s Research Director Tim Lawless says home values in Darwin dropped slightly last month, which could be due to population decline

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CoreLogic’s Research Director Tim Lawless says home values in Darwin dropped slightly last month, which could be due to population decline · 360 with Katie Woolf

• 0:00
  Speaker 1: Now the latest DARTA is in for home values with
• 0:03
  Speaker 1: a slight increase nationally last month, breaking a ten month
• 0:08
  Speaker 1: streak of declining values.
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  Speaker 2: Darwin, Canberra and Adelaide by.
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  Speaker 1: The look of things, though, have barked the trend, recording
• 0:15
  Speaker 1: a decline in values for the month.
• 0:17
  Speaker 3: Now.
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  Speaker 1: Joining us to give us a better idea of the
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  Speaker 1: full picture, it is Tim Lawless, who's Core Logic's research director.
• 0:24
  Speaker 2: Good morning to you, Tim, Good Eddy Katie. Great to
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  Speaker 2: have you on the show. Tim.
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  Speaker 1: What did the March data show us for home values nationally.
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  Speaker 3: Well, we did see a rise, as you mentioned, point
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  Speaker 3: six percent, so that's the first lift we've seen on
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  Speaker 3: a monthly basis since April last year, so just before
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  Speaker 3: interest rates started to rise. So it looks like a
• 0:46
  Speaker 3: bit of a turning point in the market. But most
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  Speaker 3: of that increase was driven by the large capitals, particularly Sydney.
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  Speaker 3: Sydney was at one point four percent, which is quite
• 0:55
  Speaker 3: quite a significant rise on a monthly basis, with the
• 0:59
  Speaker 3: smaller capitals, including Darwin, still recording some downward momentum, although
• 1:04
  Speaker 3: it's also fair to say the smaller capitals have been
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  Speaker 3: quite resilient to value falls to date, despite the fact
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  Speaker 3: that rates have written so much.
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  Speaker 1: So what you reckons cause the change for those major capitals.
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  Speaker 2: Firstly, well, I.
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  Speaker 3: Think there's a few things. Probably the biggest factor is
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  Speaker 3: just supply or advertised supply is still really low. It's
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  Speaker 3: about twenty five percent below average across the combined capital
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  Speaker 3: It's about twenty percent below the five year average nationally,
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  Speaker 3: so that this simply isn't a lot of stock to
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  Speaker 3: choose from at the moment, even though buyer numbers are lower,
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  Speaker 3: it looks like available stock and the walls have fallen
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  Speaker 3: more dramatically. But you've also got the fact that rental
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  Speaker 3: markets is extraordinarily tight. There's probably some spillover from rental
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  Speaker 3: demand flowing into purchasing demand. And then kind of similar
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  Speaker 3: to that, you've also got this absolute surge and overseas
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  Speaker 3: migration coming through now, and that would normally flow into
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  Speaker 3: rental demand. That with vacancy rates so low, I think
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  Speaker 3: the pretty good argument that more overseas migrants are fast
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  Speaker 3: tracking approchasing decision as well.
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  Speaker 1: And so then looking at how Darwin stacks up comparatively,
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  Speaker 1: I know that, like you touched on, we are obviously
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  Speaker 1: a little bit different to those major capitals.
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  Speaker 2: But why do you reckon that is.
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  Speaker 3: Well, there's a few things about Darwin. Typically it tends
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  Speaker 3: to lag the cycles for starters, but even probably beyond that,
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  Speaker 3: Darwin tends to run its own race in many ways.
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  Speaker 3: So we have seen Arwen housing values since rate started
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  Speaker 3: rising back in May last year. The market's only down
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  Speaker 3: two percent, so it's been pretty resilient so far. Compare
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  Speaker 3: it to say Sydney, where the market was down a
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  Speaker 3: bit more than thirteen percent before it started showing from
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  Speaker 3: science and turning around. So maybe this is just a
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  Speaker 3: lag and rate hikes capping up to the market. But
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  Speaker 3: we also know that population growth coming into the MP
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  Speaker 3: actually turned negative last year as well, so even though
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  Speaker 3: we're seeing an uplift and overseas migration, interstate migration coming
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  Speaker 3: into the Northern Territory did move back into negative territory,
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  Speaker 3: So maybe that's weighing on demand a little bit in
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  Speaker 3: the region.
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  Speaker 1: And today we know that the Reserve Bank of Australia
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  Speaker 1: is due to meet again to consider whether the rate rise,
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  Speaker 1: whether there is going to be a rise in interest
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  Speaker 1: rates for the eleventh consecutive time. Tim what kind of
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  Speaker 1: impact do you think it's going to have if there
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  Speaker 1: is another one, well.
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  Speaker 3: Clearly higher rates of than net negative for housing markets.
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  Speaker 3: It looks like there's some evidence that other factors are
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  Speaker 3: outweighing or offsetting the impact of higher interest rates, like
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  Speaker 3: low supply and it's improvement and demand from migration, at
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  Speaker 3: least at a macro level. But I think if we
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  Speaker 3: do see interest rates moving higher this month, it probably
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  Speaker 3: will be the last rate hike. If not, then I
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  Speaker 3: think we're pretty close to the rate hiking peak, so
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  Speaker 3: it definitely would be more bad news for borrowers and
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  Speaker 3: prospective borrowers. What I think we're pretty confident to call
• 4:03
  Speaker 3: that this will probably be either the last or second
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  Speaker 3: last rate hiker of this cycle.
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  Speaker 2: Oh we're all hoping, so, aren't we.
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  Speaker 1: It's been It's made a lot.
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  Speaker 3: Yeah, yeah. I mean if you look at mortgage rates
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  Speaker 3: or mortgage or payments for a typical borrow and say
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  Speaker 3: five hundred thousand dollars, they're paying nearly one thousand dollars
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  Speaker 3: more a month in the debt servicing. So yeah, it's
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  Speaker 3: been huge.
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  Speaker 2: Now talk me through as well.
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  Speaker 1: Did you take a bit of a closer look when
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  Speaker 1: it comes to the rental market and how things going
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  Speaker 1: for Darwin.
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  Speaker 3: Well, Darwin's rental market is again bucking the trend a
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  Speaker 3: little bit. We're still seeing rents rising, but nowhere near
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  Speaker 3: as quickly as they were through the worst of the pandemic.
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  Speaker 3: I mean, go back to say, the middle of twenty
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  Speaker 3: twenty one, Darwin rents for rising at like nearly twenty
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  Speaker 3: five percent per annum. That annual growth rate has now
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  Speaker 3: dropped back to two point six percent, So a fairly
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  Speaker 3: sharp slow down in the rate of rental appreciation, despite
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  Speaker 3: the fact that vacancy rates are still quite low. So
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  Speaker 3: maybe this is simply just a reflection of rental affordability
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  Speaker 3: forcing rentals to fit more people into a rental reform
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  Speaker 3: group household and try to spread their rental costs across
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  Speaker 3: a larger pool of tenants because rent a risen so
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  Speaker 3: much over the part sort of two or three years.
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  Speaker 1: And Jim, what do you reason we are going to
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  Speaker 1: see happen, Like, just going back on those interest rates,
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  Speaker 1: what do you think we're going to see happen if
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  Speaker 1: we do sort of see a steadying or a slowing
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  Speaker 1: up of those interst rate rises, Well, it's.
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  Speaker 3: The opposite of rates rising, of course, it's and that
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  Speaker 3: positive for housing markets. We know that even just a
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  Speaker 3: stabilization in interest rates would probably help to boost consumer
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  Speaker 3: confidence a little bit. And we look at housing activity
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  Speaker 3: and consumer sentiment is a really strong correlation, meaning when
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  Speaker 3: sentiment rises, you generally tend to see more buying and
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  Speaker 3: selling activity. So I think if we do see a
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  Speaker 3: pause in the rate hikes and maybe a peek in
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  Speaker 3: the cycle, you have to think that's going to improve
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  Speaker 3: consumer sentiments and start to see a little bit more
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  Speaker 3: activity coming back into the market.
• 6:11
  Speaker 1: Well, Tim Lawless from core Logic, the research director, or
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  Speaker 1: anything else we should be aware of this morning.
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  Speaker 2: No, I think so Katie got us covered. As always, Tim,
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  Speaker 2: we appreciate it.
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  Speaker 1: Might always love a chat and talking about what's going
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  Speaker 1: on with the data when it comes to housing.
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  Speaker 3: Thanks Katie, good much chat you too.
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  Speaker 2: Thank you