Tim Lawless CORELOGIC House Prices Continue To Rise

Australian house prices have continued to rise over the past month, according to new data. 

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Episode Transcript

Speaker 1 (00:00):
Well, Australian house prices have continued to rise over the
past month. That is, according to new data, the average
dwelling values climbed by zero point five percent in August.
It's the nineteenth consecutive monthly increase in house prices tracked
by core Logics Home Value Index. But different states and
cities obviously have seen different growth rates, and some locations

(00:23):
like Darwin Well, there have been declines. Now joining us
on the line is Tim Lawless, who is Call Logics
executive research Director. Good morning, Tim, Katie. Great to have
you on the show. Tim, can you talk me through
which parts of the country saw growth.

Speaker 2 (00:41):
Yeah, there's a real split in growth rates here, a
real diversity. You've got markets like Perth, Adelaide, Brisbane all
rising and value by more than one percent month on months.
In a market like Perth it's rising at two percent
month on month. That's adding about fifteen thousand dollars to
the typical value be home every month. It's a significant

(01:01):
level of growth. But outside of those three mid sized capitals,
you've got Melbourne that's six months into a downturn, Sydney's
losing momentum, Hobart's about twelve percent below it's peaked back
in twenty two, so there's a real diversity around the market.
Darwin has been relatively flat, even though we saw values
fall a bit last month and last quarter last year,

(01:24):
we've seen values across Darwin increased by about one and
a half percent. So it's quite a mid range and
certainly a relatively soft market, but also a very affordable
market when you compared to the other capitals.

Speaker 1 (01:36):
Yeah, Tim, do we know what's sort of causing some
locations to see that increase and continued increase and what's
sort of seeing the decline then in other locations.

Speaker 2 (01:47):
Yeah, this is all about the fit between supply and demand.
So the markets that are really strong purpose is the
best example. We're seeing really strong rates of interstate migrations
of people coming from other states to move wa looking
for housing, a very strong investment trend, as well as
more investors flock into that market, chasing the capital gains
and generally higher yields. Against Against that strong demand, there's

(02:12):
very low levels of supply, Like listings in the market
in Perth are about forty five percent below the five
year average, so homes are selling where they quickly. Buyers
have this I guess sense of urgency that they need
to get into the market quickly, whereas it's the opposite
in a market like Melbourne or Hobart. Idristate migration is negative.
You've got falling overseas migration, you've got affordability challenges that

(02:36):
are becoming less less of an influence now but they
have been in the past. And you've also got less
investment activities, so the demand side pressures are much lower.
And we've seen in the accumulation of advertised stock levels
in those markets as well. And Melbourne got about thirty
percent more listings than normal for this time of the year,
which means buyers have a lot of choice and they
can negotiate pretty hard.

Speaker 1 (02:57):
Yeah. So when you look at a place like dar
I mean like, are there quite a large number of listings,
what's the demand like? And not only for Darwin, I guess,
but for the whole of the Northern territory.

Speaker 2 (03:11):
Yeah, it's a really interesting situation in Darwin and regional
int but mostly our springs where listing numbers are actually
really low. We're seeing I use Darwin as the best example,
listings are tracking about eighteen percent lower than a year ago.
At the moment in Darwin they're down about thirteen percent
on average levels across regional mt that they're even lower

(03:32):
than that. So there's definitely a lack of supply in
this marketplace. But what's really driving the relatively soft conditions
is there's also what seems to be quite a distinct
lack of demand as well. So interstate migration coming into
the NT has never been this load the last twelve months,
well at least up to the end of last year,
interstate migration was negative to a about four thousand people.

(03:56):
The data goes back to ninety seven, nineteen eighty seven,
and we've never seen it migration this week across the
INNT before Overseas migration is pretty strong. It's kind of
canceling out that interstate flow outflow, but that's the easing
now as well, and most of that demand from overseas
flows into rental conditions anyway, so rather than producing conditions.

(04:16):
So for Darwin, this says mostly these relatively soft conditions
are mostly around the demand side, where there's not as
many people looking to buy a home across the market.
But maybe the silver lining here is, you know, we
are seeing fresh home buyer levels quite elevated across the NT.
They are about thirty one percent of mortgage demand, so
a bit above average and above the national average as well,

(04:38):
and that's a real reflection of just the affordability improvements
we've seen in the marketplace over the past decade or.

Speaker 1 (04:44):
So, Tim, can you give us a bit more detail
about the medium value of a home in the Northern
Territory comparatively to some of those other locations around Australia.

Speaker 2 (04:54):
Yeah, it's really low. So if you look at Darwin's
medium dwelling value, it's five hundred and four thousand dollars.
That's by far the lowest of any capital city. If
you go to the other extreme somewhere like Sydney, he's
got a medium dwelling value of nearly one point two million,
some more than double Darwin. If you look at just
houses specifically, so those figures were for combined houses and

(05:14):
units together, it's a really similar trend. You've got Darwin
with a median house value of about five hundred and
ninety thousand dollars, Sydney's at nearly one point five million. Now,
Melbourne's about nine hundred and thirty thousand, Brison's about nine
hundred and sixty five thousand. So to my point is
that this is a really affordable market. In fact, if
you look at values over the past ten years in Darwin,

(05:37):
they're still lower than what they were a decade ago.
In fact, the market went through record highs all the
way back in twenty fourteen May twenty fourteen, and the
market's still six percent lower than that peak level. So
just gives you a bit of context. And I spoke
the longer term growth cycle that Darwin has been quite
a mild one.

Speaker 1 (05:55):
Yeah, it has, and I guess we've sort of known
that for a while and know that we need to
be is our population. But I guess in order to
do that, we've got to get industry going as well
and get some of those major projects up and running.
I know over the years that's that's sort of that
has had a big impact on the real estate market
in the Northern Territory. I'm assuming that that's something that's

(06:16):
been seen by you guys over the years.

Speaker 2 (06:19):
Yeah. Absolutely. If you go back to the times when
when the day and market was very strong, it was
in the midst of massive infrastructure projects off the Port
of Darwin there and the natural gas sector yep. And
of course big infrastructure projects have a real multiplier effect
on a local economy. They create jobs, they create more
spending and consumption. They bring population growth, which of course

(06:43):
is a company by housing demand. So yeah, I couldn't
agree more Keatie that the more sort of the economy
becomes more buoyant, and big infrastructure projects are a good
way to get that kick started. That's probably the key
to unlocking a stronger housing market performance.

Speaker 1 (06:58):
Yeah, and tim are I mean of those interest rates
having an impact as well? Well?

Speaker 2 (07:04):
Yeah, absolutely, interest rates are obviously very high. It looks
like that they're probably not going to go any higher,
which is good news. But the timing of any rate
cuts is still highly uncertain. But my money is on
February next year we start to see rates coming down,
but that's going to be a really gradual trend anyway.
So I think beyond interest rates, which are just one
of the influencers on housing markets, you've also got the

(07:26):
demand and supply trends. We just talked about the labor
market solutioning up. Outside of Darwin affordability pressures, it's generally
a big challenge as well, and maybe this is the
silver lining of Darwin. Another performance is that the very
low healthy levels of affordability and really higher rental yields
in Darwin will probably shine through eventually and start to

(07:48):
attract more people into that marketplace. But having an affordable
housing price is just one thing. Obviously you need a
job as well, and that's the magic recipe here of
a strong economy, strong jobs market, low housing prices will
definitely attract more people into the NTS.

Speaker 1 (08:04):
Yes on any other interesting data you know across the
nation that could be gleaned or that our listeners might
be keen to know a little more about.

Speaker 2 (08:14):
Yeah, yeah, I reckon. There's two other really interesting things.
If I break the Darwin market down into some of
the smaller areas, the subregions, you can see that some
of the outer fringes are forming a little bit better.
So markets like Parniston for example, have seen values rise
about four percent over the past twelve months, Litchfield's up
three point eight percent, so stronger markets sort of once

(08:34):
you get out to the more sort of outer fringe
areas where there's more space and probably less supplying as well.
The other thing would come back to rental markets and
Darwin rental markets have generally been pretty flat. We're just
starting to see a little bit of growth return to
rental markets as well after there's been a bit of
an air. But maybe that comes back to again just

(08:55):
a lack of investment coming into that marketplace. Rental supplies
generally pretty low.

Speaker 1 (09:00):
Well, Tim, it is always good to catch up with you.
I always appreciate your time and talking us through you know,
the research that you guys do. I think it's really interesting.
I mean, when you look at your home, for a
lot of people, it's the biggest asset, one of the
biggest assets they're ever going to have, and you know,
want to make sure that it if they're looking to
sell or looking to buy, it's of even more interest

(09:20):
to them at this point in time.

Speaker 2 (09:22):
Yeah. Absolutely, Katie, It's always a pleasure to have a chat. Thanks.
Thanks for writing me on the show.