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Speaker 1: But we do know that. Obviously, the big news yesterday

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Speaker 1: was the fact that the Reserve Bank had increased interest

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Speaker 1: rates for the fourth month in a row, raising its

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Speaker 1: cash rate target by half a percentage point. So the

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Speaker 1: rise in this cash rate since early May does mean

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Speaker 1: that it's going to add about four hundred and seventy

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Speaker 1: two dollars a month to repayments on a five hundred

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Speaker 1: thousand dollar loan. Now, we know that it is having

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Speaker 1: an impact on a lot of people with mortgages in

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Speaker 1: the Northern Territory, but we also know that those house prices.

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Speaker 1: If you're in the market to purchase one and those

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Speaker 1: house prices have gone down a little bit, it's probably

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Speaker 1: music to your ears, Whereas if you are somebody who's

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Speaker 1: hanging on to a mortgage and trying to maintain that property,

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Speaker 1: it could be quite a difficult time for you. But

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Speaker 1: joining us on the line right now to tell us

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Speaker 1: a little bit more about how the market is looking

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Speaker 1: from core logic, it is Tim Lawless. Good morning to you.

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Speaker 2: Tim Katie, good morning.

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Speaker 1: Lovely to have you on the show.

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Speaker 2: Tim.

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Speaker 1: In the last quarter, How did Darwin perform regarding those

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Speaker 1: house prices, Well.

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Speaker 2: Darla was actually one of the better markets in terms

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Speaker 2: of resilience to falls. We saw Darwin housing values rise

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Speaker 2: almost two percent over the quarter, and just over the

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Speaker 2: month of July alone they're up about half or percent.

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Speaker 2: So in dollar terms, that means we saw Darwin housing

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Speaker 2: values rise by about two six hundred dollars in a month,

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Speaker 2: nearly nine five hundred dollars over the quarter. So yeah,

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Speaker 2: bucking the trends that we're seeing in Sydney's calling really

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Speaker 2: rapidly so as Melbourne most of the other capitals are

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Speaker 2: starting the trend lower now, not quite the case for Darwin.

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Speaker 1: Yeah, right, it'll be an interesting one for us to

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Speaker 1: keep an eye on. And I guess with those house

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Speaker 1: prices still going up for that last quarter, good news

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Speaker 1: if you're somebody who's who has a house and you're

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Speaker 1: hanging on to that mortgage. Maybe not such good news

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Speaker 1: if you're trying to enter the market.

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Speaker 2: Well, that's exactly right. There's always different perspectives. So if

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Speaker 2: you if you do on home in Darwin and then

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Speaker 2: you probably do want values to rise, especially considering if

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Speaker 2: you've held a home for a Darwin for a long time,

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Speaker 2: chances are you're still seeing the value are property lower

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Speaker 2: than what it was. So even even look at the

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Speaker 2: peak in the marketplace was way back in twenty fourteen,

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Speaker 2: and we haven't quite seen Darwin prices recover to those

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Speaker 2: levels just yet. There's still down about eleven percent from

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Speaker 2: where they were when the market was crazy back in

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Speaker 2: that sort of the nearly part of the two thousands.

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Speaker 2: So chances are, you know, people who own a property

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Speaker 2: in Darwen are probably going to be looking for more

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Speaker 2: price growth, But affordability is actually pretty straightforward. Compared to

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Speaker 2: markets like Sydney or Melbourne. There's like a Darwin's Medium

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Speaker 2: prize of a dwelling into about five hundred and six

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Speaker 2: thousand dollars. You're buying in Sydney it's about one point

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Speaker 2: one million, Melbourne's at seven hundred and ninety thousand, so

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Speaker 2: pretty cheap when you're looking at the northern territory.

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Speaker 1: Yeah, and I guess it always depends what area of

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Speaker 1: the territory you're looking at that and we've spoken a

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Speaker 1: little bit there about Darwin does score logic sort of

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Speaker 1: look more, you know, more regionally, I guess as well,

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Speaker 1: or a little bit further out at the likes of

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Speaker 1: Palmerston and the rural area and any of those other locations.

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Speaker 2: Yeah. Absolutely, We look at property prices everywhere, property markets everywhere,

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Speaker 2: and we can see there is a bit of diversity.

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Speaker 2: You know, if you've got a parmesan, for example, then

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Speaker 2: the market's been just a little bit softer. If you

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Speaker 2: come back into some of the inner city markets, they've

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Speaker 2: been a bit stronger. And maybe surprisingly, we've actually seen

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Speaker 2: the unit market a little bit stronger over the last

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Speaker 2: six months as well, which is quite the turnaround because

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Speaker 2: we have been seeing unit prices in Darwin have been

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Speaker 2: very weak for a long period of time. In fact,

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Speaker 2: there's still about twenty six percent below their peak. If

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Speaker 2: you are in a unit in Darwin, the value its

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Speaker 2: currently tracking where it was all the way back in

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Speaker 2: about two thousand and eight.

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Speaker 1: Yeah, right, And I guess at the moment as well,

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Speaker 1: you know, when it comes to rentals, there is a

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Speaker 1: bit of constraint I guess you'd say on the rental

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Speaker 1: market in the sense that you know, if you're trying

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Speaker 1: to find a property to move into, there's not a

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Speaker 1: huge amount available.

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Speaker 2: No, rental markets are extraordinarily tight everywhere around the country,

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Speaker 2: including Darwin. The vacancy rate across Darwin's only one point

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Speaker 2: one percent. Wow, it's about one point two percent for

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Speaker 2: houses one percent for units. On average, over the past

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Speaker 2: decade or so, you typically expect the Darwin vacancy rate

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Speaker 2: to be around about the four percent mark. So it

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Speaker 2: just highlights how tight the rental market is and demand

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Speaker 2: for rentals is still quite strong, but there's not a

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Speaker 2: lot of supply there, which means rental prices are rising

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Speaker 2: quite quickly and tim is.

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Speaker 1: It a similar situation in other capital cities or other

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Speaker 1: parts of Australia as well when it comes to the

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Speaker 1: rental market.

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Speaker 2: Absolutely, we're seeing a rental crisis pretty much everywhere. Vacancy

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Speaker 2: rates tend to be around that one percent market, if

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Speaker 2: not even lower than that across most of the capitals,

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Speaker 2: and then getting into regional market vacancies tend to be

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Speaker 2: even lower. So it doesn't look like we're in a

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Speaker 2: situation where renters have really Rental demand has really been

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Speaker 2: amplified through the pandemic. A lot of rental households becoming smaller,

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Speaker 2: so group households splitting up to become loan persons or couples.

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Speaker 2: People generally have been avoiding high identity rentals as well,

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Speaker 2: at least during the height of the pandemic, wanting to

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Speaker 2: move away from a shared amenity environment. That's all starting

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Speaker 2: to change now, though, I think simply because rental affordability

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Speaker 2: is now forcing people to really maximize their occupancies and

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Speaker 2: potentially towards the media, the high density sector, because it

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Speaker 2: is quite a bit more affordable to rent.

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Speaker 1: Oh absolutely, and it's tough going for so many people

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Speaker 1: out there as well. If you're not able to find

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Speaker 1: a rental property or the cost of that rental property

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Speaker 1: has gone up. It's certainly making it pretty difficult for

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Speaker 1: a lot of people, especially.

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Speaker 2: When you compare the fact what all rents across dow

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Speaker 2: and there are about twenty eight percent through the COVID

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Speaker 2: phase so far since about March twenty twenty three to now,

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Speaker 2: we've seen rents ride only thirty percent. Huge incomes haven't

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Speaker 2: moved anywhere near that much. And then to add further pain,

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Speaker 2: we've got this really rapid rate of inflation. It's being

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Speaker 2: driven by things we can't really pull back our expenditure on,

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Speaker 2: like fuel and energy costs and construction costs. So for

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Speaker 2: a lot of households, they're really in this pinture movement

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Speaker 2: if you will, of a lot higher costs for things

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Speaker 2: you need to buy, as well as higher accommodation costs well.

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Speaker 1: And then of course yesterday we learned that the Reserve

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Speaker 1: Bank raised the official interest rate by another half a

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Speaker 1: percent yesterday. What impact does this have on those firstly

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Speaker 1: that have mortgages in the territory.

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Speaker 2: Well, clearly this is a bad thing for anybody who

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Speaker 2: has debt because they're paying more for having that debt.

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Speaker 2: So if you think about the typical house price in Darwin,

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Speaker 2: it's about five hundred and six thousand dollars a typical

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Speaker 2: dwelling price. Most people would have a twenty percent deposit

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Speaker 2: if they're buying into the market. So before interest rates

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Speaker 2: started to rise, your typical repayment on a mortgage based

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Speaker 2: on that medium price would be about fifteen hundred and

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Speaker 2: eighty bucks a month based on interest rates rising to

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Speaker 2: the cash rate at one point at five. Now that

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Speaker 2: means variable mortgage rates are probably around about four point

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Speaker 2: two percent now, so that's gone. The month of your

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Speaker 2: payments are gone from about sixteen hundred up to about

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Speaker 2: nineteen hundred and nearly two thousand dollars a month. So

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Speaker 2: an increase of about three hundred and ninety dollars, and

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Speaker 2: chances are ready going to go up a lot further

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Speaker 2: from here. So I think for anybody who does have

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Speaker 2: a mortgage, they can expect they'll be paying more that

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Speaker 2: for that debt.

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Speaker 1: Yeah, and that's a tough thing. As you've just pointed

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Speaker 1: out as well, the cost of living is going up

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Speaker 1: in so many different areas. Petrol here in the territory

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Speaker 1: we're playing an astronomical amount. And then when you look

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Speaker 1: at at things like your fruit and vege and when

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Speaker 1: you go to do your grocery shopping, transport costs for

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Speaker 1: a lot of different you know, a lot of different

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Speaker 1: businesses are on the rise. There is no doubt that

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Speaker 1: that cost of living is having a big impact I

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Speaker 1: would think, not only on those that own their homes,

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Speaker 1: but those that are renting or looking to rent.

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Speaker 2: Yeah. Absolutely so ultimately you'd have to think that household

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Speaker 2: balance sheets are going to need more thinly stretched, which

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Speaker 2: means people stop spending on things they don't need to

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Speaker 2: spend on, so less dining out, less holidays, less fancy shoes,

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Speaker 2: that type of thing, and probably also it means for

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Speaker 2: the housing sector, less housing demand. For people looking to

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Speaker 2: get a mortgage, Lenders becoming a lot more cautious as well,

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Speaker 2: particularly if they're lending to borrowers with high debt levels

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Speaker 2: relative to their incomes. And of course for renters, higher

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Speaker 2: interest rates don't all that more all that meaningful, but

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Speaker 2: you probably will find with the vagancy rate as low

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Speaker 2: as what it is, landlords are trying to pass an

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Speaker 2: additional cost onunder rent as well.

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Speaker 1: Yeah, what kind of long term impact do you think

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Speaker 1: it's going to have, tim, I guess us the board

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Speaker 1: when you look at when you look at the housing market.

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Speaker 2: There's a whole bunch of things that flow out of this. Obviously,

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Speaker 2: housing affordability in Darwin isn't as challenging as what it

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Speaker 2: is in other parts of the country, but we probably

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Speaker 2: will find that rental affordability starts to become a lot

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Speaker 2: more in focus. And also for those people that are

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Speaker 2: able to get their foot in the door of the

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Speaker 2: housing market. We're probably moving from a situation where there's

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Speaker 2: been a lot of focus on you know, being able

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Speaker 2: to save for a deposit and get your foot in

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Speaker 2: the door, to now focusing on well, once you do

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Speaker 2: own a home, what does it mean for your mortgage

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Speaker 2: or payments, can I actually afford them? And doesn't mean

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Speaker 2: I need to cut back on my lifestyle as well.

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Speaker 2: There's also a bunch of other things around. You know,

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Speaker 2: if you can't afford to put a roof over your head,

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Speaker 2: then you're going to need to rely on some sort

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Speaker 2: of social or community housing. I think it's fair to

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Speaker 2: say we need to see a lot more funding coming

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Speaker 2: out of the federal and the territory government to make

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Speaker 2: sure that there are more affordable housing options available.

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Speaker 1: Yeah, you're spot on. It's something that we've spoken about

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Speaker 1: on this show before. We've certainly you know, we've spoken

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Speaker 1: to NT Shelter and others about that very issue and

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Speaker 1: how tough it is as well when you're trying to

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Speaker 1: grow the workforce, if there's nowhere that they can that

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Speaker 1: they can live at an affordable cost, that's exactly right.

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Speaker 2: Everybody needs a roof over their head, regardless of their

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Speaker 2: of their situation and the financial situation. So more funding

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Speaker 2: I think would be spent very quickly and very effectively.

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Speaker 1: Perfect well tim lawless from our core logic. We really

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Speaker 1: appreciate your time this morning and giving us that insight

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Speaker 1: into the market. Thank you. So much.

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Speaker 2: Thanks Katie, Lovely to shat, thank you,