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Speaker 1: We do know that the latest figures are in for

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Speaker 1: the housing market with values continuing on a downward trend.

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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

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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.