TOURISM hotspots and areas favoured by sea-changers have among the highest concentration of borrowers who have fallen behind on their mortgage repayments.
In a sign of weakness in the holiday home market, the rate of mortgage arrears has continued to rise in beachside areas in NSW and Queensland, according to figures to be published today by Fitch Ratings.
The number of people falling behind on repayments rose in several suburbs around the Gold Coast and the report says there is "no sign of stabilisation" in the area.
Nelson Bay, north of Sydney, had Australia's highest share of mortgage delinquencies, at 7.8 per cent of loans by value.
The figures, collected in March, also showed south-west Sydney suburbs including Hoxton Park and Green Valley had large numbers of people failing to keep up with repayments. Fitch said these households would benefit from the cuts to interest rates in May and June.
The weakness in tourism areas highlights that local economies are feeling the strain as more Australians exploit the high dollar and take their holidays overseas.
In NSW, central coast house prices are 6.9 per cent below their peaks, while Byron Bay property prices are down 13.8 per cent.
"All these markets really have quite a similar performance in the sense that we've seen some material declines in values," Tim Lawless, the director of research at RP Data, said.
The weakness of sharemarkets had also choked off housing demand from Australian retirees, many of whom have deferred their retirement, 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."
The weakness in coastal regions suggests the poor performance of tourism is hurting the value of holiday home investments.
On the Gold Coast, the Fitch analyst James Zanesi said many of the borrowers who were falling behind in their repayments were investors, rather than owner-occupiers.
"A large number of the houses in those areas are investment homes or second homes," he said. "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 outperformed the rest of the country.
Frequently Asked Questions about this Article…
What did Fitch Ratings find about mortgage arrears in Australian coastal and tourism hotspots?
Fitch Ratings found the rate of mortgage arrears continued to rise in beachside areas of NSW and Queensland, with rising numbers of borrowers falling behind on repayments around the Gold Coast and a report observation of "no sign of stabilisation." The data were collected in March.
Which suburbs had the highest mortgage delinquencies and how large were they?
Nelson Bay had the highest share of mortgage delinquencies at 7.8% of loans by value. The report also highlighted large numbers of borrowers falling behind in south‑west Sydney suburbs, including Hoxton Park and Green Valley.
Why is the holiday home market weakening in coastal regions?
The article says tourism weakness is hurting holiday‑home values: more Australians are holidaying overseas because of the high Australian dollar, which strains local tourism economies and reduces demand for holiday homes and investment properties in coastal areas.
How have house prices moved in some coastal markets like Byron Bay and the Central Coast?
According to the article and RP Data director Tim Lawless, Central Coast house prices are about 6.9% below their peaks, while Byron Bay property prices are down 13.8%, reflecting material declines in several coastal markets.
Are investors or owner‑occupiers more likely to be behind on repayments in places like the Gold Coast?
Fitch analyst James Zanesi noted that many borrowers falling behind on the Gold Coast are investors or owners of second homes rather than owner‑occupiers, as those areas include a large number of investment and holiday properties.
Could recent interest rate cuts help households behind on mortgage repayments?
Fitch said households in some affected suburbs—particularly in south‑west Sydney—would benefit from the interest rate cuts implemented in May and June, which should ease repayment pressures for some borrowers.
How has weakness in sharemarkets affected housing demand in coastal retirement areas?
The weakness of sharemarkets has reduced housing demand from Australian retirees. Many prospective retirees have deferred retirement after seeing large falls in their share portfolios and retirement savings, which has dampened demand for homes in popular retirement locations such as the Gold Coast.
Are any Australian regions performing better than coastal tourism areas?
Yes. The article notes that most regions in Western Australia outperformed the rest of the country, contrasting with weaker performance in several NSW and Queensland coastal tourism areas.
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