This Week in Real Estate – 8th September 2022
Mortgage Arrears Drop To Record Low
The high employment rate means mortgage arrears are at their lowest levels in two decades.
Analysis by Fitch Ratings shows Australia’s 30-day mortgage arrears fell to 0.82% in the three months to June 30, the lowest level since tracking began in 2002.
The 90-day mortgage arrears fell to just 0.4% quarter-on-quarter in June.
HSBC chief economist Paul Bloxham does not expect those levels to increase substantially on the back of rising interest rates.
He says banks have strong lending standards which ensure borrowers have a significant buffer to meet interest rate rises.
“The RBA suggests that a 300 basis points rise in rates would not change overall mortgage repayments for around 35% of borrowers,” he says.
“However, the same work shows that around 30% of borrowers will face a sharp rise of over 40% in their repayments.”
Fitch predicts house prices will fall in 2022 but owners will still come out on top because of the strong growth in previous years.
Homes Still Selling Fast In Many Areas
A large family home in the suburbs continues to be popular, with new data showing those types of houses sell faster than others.
PropTrack says 90% of the fastest-selling houses in the 12 months to the end of June were three-bedroom homes in suburbs with a median price of less than $1 million.
It says three-bedroom houses in Sydney’s Camden South ($764,500) are selling within 14 days on average while in Gordon ($727,500) in Canberra and New Town ($945,000) in Hobart houses sell on average in 16 days.
Houses sell faster than units in most suburbs although in Manly Vale on Sydney’s Northern Beaches one-bedroom or two-bedroom units sell on average within 18 days.
PropTrack senior economist Eleanor Creagh predicts more properties will be listed for sale in the coming weeks.
“Spring is a popular time for vendors to sell,” she says. “As we head through September, we are likely to see an increase in the number of properties hitting the market.”
Quote of the Week
“Those forecasts take me back to April 2020, when there was panic selling and predictions property prices would drop 30% because of the pandemic. They didn’t – and instead home values rose more than 35% over the next two years as demand for real estate surged.”
Personal Finance writer for The Australian Anthony Keane, urging consumers to ignore doomsday forecasts
Price Gloom Shouldn’t Spell Doom
Property owners shouldn’t worry about dire predictions that prices will drop, according to Personal Finance writer for The Australian, Anthony Keane.
Keane says while there is a lot of bad news being peddled as prices ease, there are many reasons to remain positive about the longer-term outlook for property.
He says major bank economists are tipping that real estate prices will drop by 15-20% by the end of next year but he does not believe that will happen.
“Those forecasts take me back to April 2020, when there was panic selling and predictions property prices would drop 30% because of the pandemic,” he says.
“They didn’t – and instead home values rose more than 35% over the next two years as demand for real estate surged.”
Keane says real estate has proven its resilience many times.
“Since 2000 we’ve witnessed wars, a pandemic, stock market collapses and a global financial crisis, yet home prices are much higher than two decades ago.”