The country’s tourism hotspots and coastal areas are continuing to suffer, with these suburbs appearing as some of the worst in a new list of locations ranked by mortgage delinquency rates.
Queensland has been pegged as the worst state in the new Fitch Ratings report, with its tourism hotspots having had an effect on the property market for several years now.
However, Fitch Ratings analyst James Zanesi told SmartCompany this morning the situation should improve over the next six months as rate cuts from the RBA flow through into consumers’ pockets.
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“It’s hard to look at something 18 months into the future, but over the next six to 12 months I think we’ll see monetary policy start to have a positive effect on delinquency rates.”
Queensland remains the worst performing state. It carries a 30+ day delinquency rate of 1.86% as of March 2012, up from 1.7% in September 2011 and above the national average of 1.6%.
The national rate of 1.6% is also up 18 basis points since September 2011.
“For the first time since this report was first published, (November 2007), most of the 10 worst performing regions are in Queensland rather than New South Wales,” the report states.
The breakdown of figures reveals a grim picture. Half of the delinquent loans on the Gold Coast are overdue by more than 90 days, and most of the defaulted loans are located in the southeast – which has two of the top 20 worst performing postcodes.
Ipswich, Logan City and the Gold Coast are cited as among the worst performing areas.
“The agency believes that tourism-based coastal regions, like the Sunshine Coast and the Gold Coast east, are subject to a higher level of volatility than the rest of Queensland in the long term,” the report said.
“This is because their economies are less diversified than the rest of the state, a fact that is likely to impact house prices and mortgage performance.”
Tourism has been under intense pressure due to the impact of the global financial crisis, and domestic economic issues such as the higher dollar.
Zanesi says while there are a significant number of factors that result in mortgage delinquency statistics, tourism appears to be a key motivator.
“First of all, I would say the local economy is dependent on the level of tourism and that is for sure having an impact.
“Also, Australia has not experienced the same appreciation of housing prices in the past few years that it did previously. This area has a large number of second homes, which could also be a factor.”
There may be a larger number of investors in these areas keeping these homes rather than selling so they don’t take in a loss over time, Zanesi says.
The tourism market in New South Wales has also been affected. Nelson Bay has suffered the highest number of mortgage delinquencies against value, at 7.8%.
However, there have been improvements. Victoria’s delinquency rate was just 1.28%, compared to 1.73% in New South Wales.
Western Australia has performed well. The state’s rate only worsened marginally to 1.59% from 1.5%, and no region in the state was high among the country’s worst-performing regions.
Zanesi says it’s difficult to make predictions, especially about coastal areas, but he suggests RBA monetary policy may help home owners by the end of the year.
The 20 worst performing postcodes by value:
- Nelson Bay, NSW – 2315
- Hoxton Park, NSW – 2171
- Surfers Paradise, QLD – 4217
- Eagle Vale, NSW – 2558
- Budgewoi, NSW – 2262
- Arncliffe, NSW – 2205
- Rooty Hill, NSW – 2766
- Cessnock, NSW – 2325
- Helensvale, QLD – 4212
- Macquarie Fields, NSW – 2564
- Tweed Heads, NSW – 2485
- Waterford, QLD – 4133
- Pacific Paradise, QLD – 4564
- Crestmead/Marsden, QLD – 4132
- Beaudesert, QLD – 4285
- Carbrook, QLD – 4130
- Greenacre, NSW – 2190
- Green Valley, NSW – 2168
- Palm Cove, QLD – 4879
- Casuarina, WA – 6167