NAB expects house prices to fall for next year BY: SARAH DANCKERT From: The Australian September 29, 2011
David and Catherine Digger New home sales still near deca...
David and Catherine Digger outside the house at Trinity Beach in Cairns that they have just sold for less than what they paid. Picture: Brian Cassey Source: The Australian Source: The Australian
MORTGAGE holders could face an equity crisis as research shows more than 300,000 homes nationally are today worth less than their owners paid for them.
That includes almost 100,000 homes bought since the onset of the global financial crisis in early 2008, many of which were first homes purchased with the assistance of federal and state grants.
Queensland has been hardest hit by declining home values, with about one in seven homeowners sitting on paper losses, according to RP Data's analysis of the difference between the price of the property at purchase and today, but not homeowner debt.
The worst regions were far north Queensland, the Gold Coast and the Sunshine Coast.
One in 10 homes in Western Australia are now worth less than their owners paid for them, with the southeastern region dragging down the state's overall figure.
At Trinity Beach, a suburb of Cairns, resident David Digger sold his home for 20 per cent less than its purchase price of $600,000. However, he has no regrets, having bought elsewhere in the same area for a "good" price.
"Considering the market, I think we did very well," Mr Digger said, while unpacking boxes in his new home.
Agent Mark Carmady of Ray White Cairns Beaches said most buyers in the region knew house prices were falling.
"I think most people up here are aware of how depressed the market is," Mr Carmady said, adding that there were opportunities to buy in at a low price.
RP Data national research director Tim Lawless said housing markets had softened nationally in the past year -- down 2.7 per cent from their October peak to June -- and a number of homes would have lost value.
Homes bought between October and June may have fallen "below their contract price", Mr Lawless said.
National Australia Bank said it expected national house prices to continue falling over the next 12 months, dragged down by Victoria and Queensland.
NAB's residential property index for the third quarter fell to negative 14 points, from negative five points in June, due to sliding house prices and a slowing of rental growth. NSW and WA bucked the national trend, producing small index gains.
For September, house prices nationally slid by 2.4 per cent after a decline of 2 per cent in June, with a further 1 per cent slide expected in the next 12 months.
Moody's Investor Services, meanwhile, reports that the ability of homeowners to pay their mortgage has "materially deteriorated" in the past year.
According to Moody's, the boom states of WA and Queensland had the largest number of people falling behind on mortgage payments. Times were tough on Queensland's Gold Coast and Sunshine Coast, where mortgage delinquencies were 3.1 per cent and 2.88 per cent.
In northwest Sydney suburbs such as Oakhurst, Glendenning and Plumpton, 5.2 per cent of borrowers are 30 days or more behind in mortgage repayments.
A survey of major residential builders shows new homes sold in August rose only 1.1 per cent, after falling 8 per cent in July.
Households were unwilling "to commit, given the uncertain domestic and global economic conditions . . . and that is understandable", the Housing Industry Association's Harley Dale said.
