Borrowers struggling in tourism areas
TOURISM hot spots and areas favoured by sea-changers have among the highest concentration of borrowers falling behind on their mortgage repayments, figures show.
TOURISM hot spots and areas favoured by sea-changers have among the highest concentration of borrowers falling behind on their mortgage repayments, figures show.In a sign of weakness in the holiday-home market, the rate of mortgage arrears has continued to rise in key beachside areas in New South Wales and Queensland, according to figures to be published today by Fitch Ratings.Victoria, on the other hand, has lower levels of mortgage delinquency than most of the other big states.Despite rising numbers of people falling behind on their mortgages in north-west Melbourne, the state's overall arrears rate was 1.28 per cent, compared with 1.73 per cent in NSW and 1.86 per cent in Queensland, Fitch said.The figures, collected in March, showed arrears rates rose in several suburbs around the Gold Coast including Surfers Paradise and Tweed Heads, and the report said there was "no sign of stabilisation" in the area.Nelson Bay in NSW, a popular holiday destination north of Sydney, had Australia's highest share of mortgage delinquencies, at 7.8 per cent of loans by value.The weakness in key tourism areas highlights that local economies in tourism areas are feeling the strain as more Australians take holidays overseas.RP Data research director Tim Lawless said the biggest falls in the "lifestyle" market had occurred in Queensland and NSW.Prices of units in Cairns have fallen 22.2 per cent from their peak, while units on Victoria's Surf Coast have lost 6.8 per cent."All these markets really have quite a similar performance in the sense that we've seen some material declines in values," Mr Lawless said.The ongoing sharemarket slump has also choked off housing demand from some Australian retirees, many of whom have deferred plans to retire on the coast, he said."All those people that were aspiring to put their feet up at the Gold Coast and retire, a lot of them are rethinking because they've seen a halving of their share portfolio and their retirement savings aren't what they used to be," Mr Lawless said.The ongoing weakness in beachside regions suggests the poor performance of regional tourism is hurting the value of holiday home investments.On the Gold Coast, for instance, Fitch analyst James Zanesi said many of the borrowers who were falling behind on their repayments were investors, rather than owner-occupiers."When house prices are going down you might have a borrower who is trying to hold onto a home because they don't want to make a loss."Most regions in Western Australia performed better than the rest of the country as income from the mining boom spread through the state's economy.
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