Jump to content
House Price Crash Forum
Sign in to follow this  
Boom'n'Bust

Slide To Negative Equity

Recommended Posts

http://www.theaustralian.news.com.au/story...9-25658,00.html

Slide to negative equity

Anthony Klan

September 06, 2006

THE scourge of negative equity has spread to Brisbane as the property downturn continues to slug investors and the lower end of the housing market, but the Perth market continues to fire. According to Australia's largest mortgage broker, Australian Finance Group, falling property values in parts of Brisbane has led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins said. AFG said some new construction projects in that state were being independently valued at 20 per cent below asking prices. "That's your first classic sign that things are slowing right off and people are becoming far more cautious," Mr Watkins said.

Prices were also coming under pressure in parts of Melbourne with valuations of properties "in many cases showing no growth or declining values during the past 12 to 24 months". However, it is Sydney where prices have fallen the most, with the highest proportion of families facing the prospect of negative equity. "Many owner-occupiers, seeking to refinance their homes, are being disappointed by the lower-than-expected valuations being achieved," Mr Watkins said.

"If larger numbers of owners are forced to sell, this will trigger even greater declines, affecting more property values." Unit developments at Green Square in Sydney's inner southwest, and outer northern suburbs such as Waitara and Hornsby, had been hardest hit by the downturn. Apartment values had fallen by as much as 20 per cent in Green Square, where developers were opting to rent out apartments rather than sell them for fear of further price falls.

Properties at the lower end of the market were worst affected during the year, with values at the top end of market continuing to surge. AFG said the average Australian mortgage had grown to $306,783. Perth continued to rocket in the year to August, with average mortgages in Western Australia now the second highest in the country at $340,531.

This is above both Queensland at $288,823, and Victoria at $283,717. Average mortgages in Western Australia were behind those in NSW, which averaged $377,068. Despite continued weakness in the market there had been a strong increase in the proportion of investors in the year to June.

AFG said 31.6 per cent of borrowers in August were investors, up 23.4 per cent on August last year. Housing Industry of Australia chief economist Harley Dale said some of that increased activity had probably been fuelled by expectations of rising rents. "The rental market has been tight for some time now and that's starting to feed through to strong rental growth," Mr Dale said.

"Also, a little bit of the shine has come off equity markets, so some people may be starting to feel there could be a switch back from stocks to the property market over the next two or three years." He said the total level of residential property investment was still about 12 per cent below the peak of the market in late 2003.

Share this post


Link to post
Share on other sites

http://www.theaustralian.news.com.au/story...9-25658,00.html

Slide to negative equity

Anthony Klan

September 06, 2006

THE scourge of negative equity has spread to Brisbane as the property downturn continues to slug investors and the lower end of the housing market, but the Perth market continues to fire. According to Australia's largest mortgage broker, Australian Finance Group, falling property values in parts of Brisbane has led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins said. AFG said some new construction projects in that state were being independently valued at 20 per cent below asking prices. "That's your first classic sign that things are slowing right off and people are becoming far more cautious," Mr Watkins said.

Prices were also coming under pressure in parts of Melbourne with valuations of properties "in many cases showing no growth or declining values during the past 12 to 24 months". However, it is Sydney where prices have fallen the most, with the highest proportion of families facing the prospect of negative equity. "Many owner-occupiers, seeking to refinance their homes, are being disappointed by the lower-than-expected valuations being achieved," Mr Watkins said.

"If larger numbers of owners are forced to sell, this will trigger even greater declines, affecting more property values." Unit developments at Green Square in Sydney's inner southwest, and outer northern suburbs such as Waitara and Hornsby, had been hardest hit by the downturn. Apartment values had fallen by as much as 20 per cent in Green Square, where developers were opting to rent out apartments rather than sell them for fear of further price falls.

Properties at the lower end of the market were worst affected during the year, with values at the top end of market continuing to surge. AFG said the average Australian mortgage had grown to $306,783. Perth continued to rocket in the year to August, with average mortgages in Western Australia now the second highest in the country at $340,531.

This is above both Queensland at $288,823, and Victoria at $283,717. Average mortgages in Western Australia were behind those in NSW, which averaged $377,068. Despite continued weakness in the market there had been a strong increase in the proportion of investors in the year to June.

AFG said 31.6 per cent of borrowers in August were investors, up 23.4 per cent on August last year. Housing Industry of Australia chief economist Harley Dale said some of that increased activity had probably been fuelled by expectations of rising rents. "The rental market has been tight for some time now and that's starting to feed through to strong rental growth," Mr Dale said.

"Also, a little bit of the shine has come off equity markets, so some people may be starting to feel there could be a switch back from stocks to the property market over the next two or three years." He said the total level of residential property investment was still about 12 per cent below the peak of the market in late 2003.

There's just as much 'good' news as 'bad' in this piece. Any reason for the dramatic heading or just more HPC selective hearing?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 333 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.