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Speaker 1: Just taking your cross to the housing market. Well, it's

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Speaker 1: reportedly heating up. September just clock the biggest jump in

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Speaker 1: national home values since October last year. The latest starter

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Speaker 1: from Totality shows prices rose zero point eight percent nationally,

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Speaker 1: with capital cities like Brisbane, Perth and Darwin leading the charge.

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Speaker 1: Now Darwin led the way with values increasing one point

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Speaker 1: seven percent as I understand it last month, followed by Perth, Brisbane, Adelaide, Sydney, Canberra,

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Speaker 1: Melbourne and Hobart. Now we've then got the expansion of

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Speaker 1: course of the Federal Government's home guarantee scheme. Is it

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Speaker 1: is expected that it's going to fuel price growth with

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Speaker 1: no income or place limits on the scheme, allowing eligible

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Speaker 1: first time buys to purchase with a five percent deposit.

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Speaker 1: Now joining us on the line to talk more about

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Speaker 1: this is Cotalities Research director Tim Lawler skoodboarding. Tim, lovely

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Speaker 1: to have you on the show and Tim, such an

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Speaker 1: interesting week with the expansion of course of the Federal

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Speaker 1: government's first home bio grants. I mean, before we get there,

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Speaker 1: my understanding is Darwin recorded a jump in home values

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Speaker 1: over the last quarter. Can you talk us through what

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Speaker 1: kind of numbers we're talking.

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Speaker 2: Yeah, the September quarter was up nearly six percent, and

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Speaker 2: by far the largest gains of any capital city is

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Speaker 2: occurring in Darwin. So they give you some context that

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Speaker 2: that five point nine percent rise in September is about

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Speaker 2: an increase of about thirty one thousand dollars, So it's

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Speaker 2: a pretty big jump, especially when you consider us off

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Speaker 2: a low base as well. So Darwin seems to be

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Speaker 2: running its own race here. I mean, sure Brisbane and

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Speaker 2: Perth are pretty strong as well, but the Darwin's in

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Speaker 2: a class of its own at the moment, of course,

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Speaker 2: following a period of extraordinarily weak conditions leading into twenty twenty.

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Speaker 2: So we need to keep the longer term context in mind,

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Speaker 2: but absolutely very strong market at the moment.

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Speaker 1: And it is good to hear. I mean, it's you know,

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Speaker 1: we like you touched on. We've had a pretty low

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Speaker 1: base to work from for a while. I guess we've

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Speaker 1: all sort of been waiting to see what would happen

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Speaker 1: with the real estate market. But what do you attribute

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Speaker 1: or do we know why those prices are seemingly on

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Speaker 1: the rise.

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Speaker 2: Yeah, there's a bunch of things. Of course, interest rates

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Speaker 2: are coming down that's part of it, but beyond that,

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Speaker 2: there is very small amounts of stock available for sales.

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Speaker 2: Listing numbers across Darwhen there are about fifty three percent

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Speaker 2: below average for this time of the year, so it's

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Speaker 2: very scarce pickings for for buyers out there. At the

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Speaker 2: same time, by demand is up about ninety eight percent

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Speaker 2: on the five year average, so it's originally double what

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Speaker 2: it would normally be at this time of the year

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Speaker 2: as well, So you've got half the amount of homes

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Speaker 2: available for sale, you've got double the amount of people

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Speaker 2: active in the marketplace. Clearly, the only way for prices

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Speaker 2: to go is up. There's also things like I mean

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Speaker 2: investors that they've doubled in activity over the past twelve

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Speaker 2: months as well, so and there's affordability. There's not much

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Speaker 2: of a barrier in terms of affordability for Darwin, like

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Speaker 2: there is another capital cities as well that there's a

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Speaker 2: median house fell you about six hundred and sixty seven

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Speaker 2: thousand dollars, the national meetings nine hundred and thirty thousand,

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Speaker 2: so it's a relatively affordable market to be buying into.

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Speaker 1: Tim How unusual is it that you know this level

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Speaker 1: of supply shortage and what impact is it then having,

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Speaker 1: I suppose on buyers and sellers.

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Speaker 2: Yeah, it's really unusual. I mean, Darwin is typically a

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Speaker 2: market where stock levels have been elevated up until you know,

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Speaker 2: a year and a half ago or so, we really

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Speaker 2: started to see demand picking up and vendor activity didn't follow.

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Speaker 2: So it's about a normal number of new listings coming

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Speaker 2: into the market. They're it's getting absorbed really quickly. The

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Speaker 2: other really strong markets like Brisbane and Perth are showing

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Speaker 2: a similar trend, but nowhere near is extreme. So Perth

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Speaker 2: listings are down about forty percent on average, Brison about

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Speaker 2: thirty percent. So yeah, I think for buyers it's going

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Speaker 2: to be quite frustrating. They'll be finding that homes are

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Speaker 2: selling really quickly. If you're a seller, you're really in

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Speaker 2: a driver's seat here.

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Speaker 1: Yeah. Well, which is great if you're a seller, but

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Speaker 1: what about those first home buyers as well. I mean,

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Speaker 1: obviously the federal governments announced, you know, the expansion of

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Speaker 1: their grant earlier this week. We were talking again yesterday,

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Speaker 1: and we spoke about it a couple of weeks ago

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Speaker 1: as well. I mean, with the you know, with the

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Speaker 1: shortage of properties available to purchase and then that price cap,

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Speaker 1: it feels as though it's quite a limited you know,

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Speaker 1: there's quite limited options if you are a first time

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Speaker 1: buyer looking to purchase a home here in Darwin or

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Speaker 1: the Greater Darwin region.

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Speaker 2: Yeah, I agree with you, and I think first home

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Speaker 2: buyers are going to be feeling a sense of urgency

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Speaker 2: to take advantage of this stimulus. To give you some context,

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Speaker 2: that the price cap in Darwin six hundred thousand dollars,

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Speaker 2: which is quite low. You know, I mentioned the median

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Speaker 2: dwelling value is all about six or about five hundred

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Speaker 2: and sixty thousand. We want to buy a house. There's

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Speaker 2: only about twenty seven percent of suburbs across Darwen have

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Speaker 2: a median value for houses that are at of below

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Speaker 2: six hundred thousand dollars. So it's again that there's done

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Speaker 2: a lot of choice there and with listings being so low,

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Speaker 2: I think those particular suburbs will be rising in value

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Speaker 2: really quickly. So for first home buyers first to invest dressed,

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Speaker 2: I think if they want to take advantage of this

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Speaker 2: five percent deposit guarantees.

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Speaker 1: Yeah, I know there's real calls from some in the

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Speaker 1: Northern Territory you know some of the mortgage brokers also

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Speaker 1: from some of some working in real estate for that

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Speaker 1: cap to you know, to be relooked at by the

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Speaker 1: federal government for us here in the Northern Territory.

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Speaker 2: Yeah, I think it makes sense. I'm not sure if

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Speaker 2: there's a review period for the price caps. I don't

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Speaker 2: think there is. These caps were set a few months back,

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Speaker 2: probably around the middle of the year I think, and

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Speaker 2: they were based on the median house values. But Darwin's

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Speaker 2: been going through such a rapid period of growth that

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Speaker 2: it's the one capital city where the large majority of

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Speaker 2: suburbs are simply below that that cap for houses. So yeah,

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Speaker 2: I agree it probably does need a relook in terms

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Speaker 2: of what the pricing threshold is for the famulus and Darwin.

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Speaker 1: Are we seeing the same growth a cross both houses

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Speaker 1: and units in Darwin and in Palmerston as well, And

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Speaker 1: obviously then I guess we might take a bit of

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Speaker 1: a look if we can at some of the more

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Speaker 1: regional parts of the Northern Territory.

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Speaker 2: Yeah. Sure, I mean, we are definitely seeing houses rising

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Speaker 2: at a faster pace than units, but there's not a

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Speaker 2: great deal of difference here. Just to give you, I

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Speaker 2: guess a view on the quarterly data. House values are

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Speaker 2: up seven percent. Unit values are up nearly four percent.

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Speaker 2: So we're typically seeing the Darwin unit market underperforming. It

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Speaker 2: has had a history of larger supply, and I think

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Speaker 2: with the affordability challenges relatively the barriers relatively low, given

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Speaker 2: the low medium value and the fact that other capital

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Speaker 2: cities are much more expensive, there is still this preference

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Speaker 2: to buy a detached home across Darwin, but there is

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Speaker 2: a pretty big price gap between the two product types.

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Speaker 2: A typical house about six hundred and sixty seven thousand dollars,

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Speaker 2: the typical unit that just over four one hundred thousand dollars.

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Speaker 2: So it's clearly a very much more affordable market to

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Speaker 2: be buying into in terms of the regional areas. So

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Speaker 2: we're not seeing Catherine or Alice Springs performing quite as

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Speaker 2: strongly as what Darwin is, but they are actually starting

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Speaker 2: to see a little bit of growth, particularly Alice Springs.

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Speaker 2: So Alice was up about four percent over the quarter,

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Speaker 2: Catherine was up half a percent, so a little bit

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Speaker 2: better than flat. But of course these markets have come

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Speaker 2: out of a really soft period. They're still well below

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Speaker 2: their record highs, you know, Alice Springs peaked all the

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Speaker 2: way back in twenty fourteen, and we're still seeing values

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Speaker 2: seven percent below that mark.

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Speaker 1: Tim when you look at the federal government's first time

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Speaker 1: BIA scheme and the impact that it's having across the nation,

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Speaker 1: give us a bit of context, you know, how has

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Speaker 1: it sort of ramped up the market? How things going well.

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Speaker 2: It's only been active for a day, so it's been

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Speaker 2: hard to tell just yet, but my speculation is it's

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Speaker 2: going to be oversubscribed, to be seeing a real surge

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Speaker 2: of first home by activity taking advantage of these price caps,

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Speaker 2: because I think pretty quickly you'll find the more desirable

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Speaker 2: suburbs just simply exceed the pricing thresholds. The other key

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Speaker 2: thing about the stimulus is even though it might be

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Speaker 2: a little bit easier to raise a five percent deposit

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Speaker 2: for first home boroers, they still need to demonstrate an

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Speaker 2: ability to service the loan, and this might be the

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Speaker 2: bigger challenge, especially considering lenders are still assessing borrowers to

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Speaker 2: repay their mortgages three percentage points higher and the going

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Speaker 2: interest rate, so that means, I mean mortgage rates at

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Speaker 2: the moment are generally sort of in the lower the

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Speaker 2: mid five percent range you needed paying back your mortgage

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Speaker 2: at least in theory on a mortgage rate above eight percent.

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Speaker 1: And obviously the you know, the theory behind it is

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Speaker 1: good and the intention behind it's really good. But I

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Speaker 1: guess a lot of people are quite worried that what

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Speaker 1: it's going to mean is that, you know, we just

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Speaker 1: see those home prices skyrocket and it's going to be

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Speaker 1: more difficult I suppose for some to be able to

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Speaker 1: enter the market.

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Speaker 2: Absolutely. I mean, this scheme does nothing to address the

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Speaker 2: underlying issues of housing affordability. It is a band aid

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Speaker 2: on the problem. So you'll find that a year from

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Speaker 2: now first home buyers are going to be nowhere near

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Speaker 2: better off. Housing has got to be more expensive, it'll

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Speaker 2: be less affordable. So it is a bit of a

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Speaker 2: popular policy that unfortunately doesn't really address the underlying issues.

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Speaker 2: We really need to be seeing more focus on getting

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Speaker 2: supplying to the marketplace and fixing a broken housing supply system.

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Speaker 1: And tim how are things looking here in the Northern

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Speaker 1: Territory when you look at at our rental market, So

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Speaker 1: you're able to give us a bit of insight in

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Speaker 1: that space, Yeah.

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Speaker 2: The rental market's burning at the moment, we've got a

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Speaker 2: vacancy rate across dar one of two point one percent

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Speaker 2: that's pretty close to record lows. Rents are rising at

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Speaker 2: nearly eight percent per annum. That's the strongest rental growth

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Speaker 2: of any capital city across the country as well, and

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Speaker 2: there's a little bit of acceleration underway as well. We

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Speaker 2: can see there's been a bit of a rebound and

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Speaker 2: never overseas migration as well. That's probably one of the

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Speaker 2: key factors that's contributing to the lower vacancy rate in

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Speaker 2: the pickup and mental growth as well well.

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Speaker 1: Tim Lawless, it is always good to catch up with you.

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Speaker 1: I really appreciate your insight. I know our listeners do

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Speaker 1: as well. And yeah, it's an interesting week I suppose

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Speaker 1: when you look at the housing market and it will

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Speaker 1: be interesting to see what happens, as you know, as

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Speaker 1: this scheme continues on.

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Speaker 2: Good to check Katie.

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Speaker 1: Thanks for being Thanks Tim