I was reading an article yesterday about the increase in “distressed listings” across parts of Australia and it got me thinking about what indicators property professionals watch when trying to understand where the market may be heading.
One of the key takeaways was that some Australian suburbs now have nearly 1 in 40 home loans in arrears.
What does that mean?
A borrower is considered to be in arrears when they have fallen behind on their mortgage repayments, whether that’s 30, 60 or 90+ days overdue.
Now, 1 in 40 is still a relatively small percentage overall, and it certainly doesn’t mean property prices are about to fall.
However, mortgage arrears are one of the indicators that investors, economists, banks and lenders monitor closely.
Why?
Because when more homeowners struggle to keep up with repayments, some may be forced to sell. If enough distressed properties come onto the market at the same time, it can increase supply and place downward pressure on prices in those specific areas.
Of course, property values are influenced by many factors including interest rates, employment, population growth, housing supply and buyer demand.
That’s why I found it interesting that the suburbs highlighted in the article were all located in NSW and Victoria, with no Queensland suburbs making the list.
My Take:
The biggest lesson for me is that property markets are local.
The national headlines might say one thing, but what’s happening in Sydney can be very different to what’s happening in Brisbane, Cairns, Rockhampton or other regional markets.
And if you’re looking to buy your first home or investment property, don’t spend too much time comparing your journey to someone else’s. Every homeowner has a different story, different challenges and different opportunities.
Focus on your own circumstances, your own goals and making the right decision for you.
Want to check at the article:
The key takeaways from the article show that a recent report found that some Australian suburbs now have nearly 1 in 40 home loans in arrears.
What does arrears mean? It is the home owner not keeping up with the home loan repayments and are now 30, 60 or 90 days behind on payments.
While that 1 in 40 is still a relatively small percentage overall, it’s a metric I and other in the industry will be watching. Why?
When more homeowners struggle to keep up with repayments, it can lead to an increase in distressed sales. If enough properties hit the market at the same time, it can put downward pressure on prices, particularly in areas already facing affordability challenges.
That doesn’t mean property prices are about to crash as there are other factors.
However, mortgage arrears are one of the leading indicators investors, economists and lenders monitor when assessing the health of a local property market.
For buyers, this can create opportunities. For homeowners, it’s a reminder that property markets are local, and some suburbs can perform very differently from others….If you check out this article, they only list NSW and Victoria suburbs (not Queensland).
The key takeaway? Don’t just look at headline property price growth and your own circumstances are different to others. Put simply, dont compare yourself, every person has a story to get into their first home or first investment property.
