Under pressure: where interest rate rises are starting to bite
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Under pressure: where interest rate rises are starting to bite

It’s a tale of two residential rings as some parts of the country’s capitals bear the brunt

By KANEBRIDGE NEWS
Tue, Jun 20, 2023 3:14pmGrey Clock 2 min

There’s no end in sight for mortgage holder pain, with some parts of the country set for a worse time than others, new analysis suggests.

While economists from the major banks are predicting rates to rise at least another 25 basis points from the current level of 4.1 percent to 4.35 percent, data from CoreLogic reveals it’s the outer suburbs of the country’s capitals most likely to feel the pressure.

Head of research at CoreLogic, Eliza Owen, said repayments on a $750,000 loan have risen by about $1,550 per month since rate hikes began in May 2022, forcing many households to dig deep.

“Households in some regions will feel the pinch more than others,” Ms Owen said. 

“The number of mortgaged, owner occupier households are generally highest in outer regions of major cities, particularly Melbourne.
“Looking at SA3 regional boundaries at the time of the 2021 Census, the highest number of mortgaged owner occupiers were in Wyndham (43,807, or around 48 percent of households), Casey –South (38,614, or 56.2 percent of households), and Wanneroo in Perth (38,320, or 54 percent of households).”

Adding further pressure on the ability of mortgage holders in those areas to service their loans, 16 of the 25 regions identified had a weekly median income lower than that of their greater capital city.

Ms Owen noted that Blacktown – North has seen a steady rise in the number of listings in  the past four weeks, while the amount of time on the market has been increasing since February. This points to more available properties on the market and greater uncertainty amongst would-be buyers.

Other parts of the market, such as mining towns and inner city areas where there are fewer owner occupier mortgages, may also be under stress, Ms Owen said. Capital gains in some areas have also clouded the impact of higher interest rates on investment mortgage holders.

“It is noticeable that new listings volumes are climbing in some of these markets, where the national trend is seeing a seasonal slowdown,” she said. “This could make it more difficult for recent buyers to make a capital gain if they are struggling to meet mortgage repayments.”



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The two Australian states where it’s a buyers’ market

Property values have experienced strong growth around the country, but there are two highly desirable areas where oversupply is putting downward pressure on sales

By Bronwyn Allen
Tue, Jun 18, 2024 2 min

While property values are rising strongly in most markets across Australia, it’s a vastly different story in Victoria and Tasmania, new data from CoreLogic shows. Over the 12 months to May 31, the median house price lifted just 1.8 percent in Melbourne and fell 0.6 percent in regional Victoria. The median dipped 0.1 percent in Hobart and ticked 0.4 percent higher in regional Tasmania. This is in stark contrast to Perth, where values are up 22 percent, and regional Western Australia, up 14.8 percent; as well as Brisbane, up 16.3 percent, and regional Queensland, up 11.8 percent.

CoreLogic Head of Research, Eliza Owen says an oversupply of homes for sale has weakened prices in Victoria and Tasmania, creating buyers’ markets.

On the supply side, there has been more of a build-up in new listings than usual across Victoria, even where home value performance has been relatively soft,” Ms Owen said. Victoria has also had more dwellings completed than any other state and territory in the past 10 years, keeping a lid on price growth. The additional choice in stock means vendors have to bring down their price expectations, and that brings values down.”

Melbourne dwelling values are now four percent below their record high and Hobart dwelling values are 11.5 percent below their record high. Both records were set more than two years ago in March 2022. The oversupply has also affected how long it takes to sell a property. The median days on market is currently 36 in Melbourne and 45 in Hobart compared to a combined capitals median of 27. It takes 55 days to sell in regional Victoria and 64 days in regional Tasmania compared to a combined regional median of 42 days.

Changes in population patterns have also contributed to higher numbers of homes for sale in recent years. Since COVID began in early 2020, thousands of families have left Melbourne because working from home meant they could buy a bigger property in more affordable areas. While many relocated to regional Victoria, a significant proportion left the state altogether, with South-East Queensland a favoured destination. Meantime, Tasmania’s surge in interstate migration during FY21 was short-lived. Data from the Australian Bureau of Statistics shows the island state has recorded a net loss of residents to other states and territories every quarter since June 2022.

Record overseas migration has more than offset interstate migration losses, thereby keeping Victoria’s and Tasmania’s populations growing. However, the impact of migrants on housing is largely seen in the rental market, so this segment of population gain has done little to support values. Growth in weekly rents has been far stronger than growth in home values over the past year, with rents up 9 percent in Melbourne and 4.8 percent in regional Victoria, and up 1 percent in Hobart and 2.7 percent in regional Tasmania.

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Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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