330 suburbs: How much Qld homeowners really owe the bank
Debt levels required to buy a home are escalating so fast locals will soon be priced out in some areas, research warns. Search outstanding mortgages: suburb-by-suburb. INTERACTIVE
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The level of debt required to buy a home across Queensland is escalating so fast that soon locals will be priced out in some areas, new research warns.
Digital Finance Analytics found homeowners were putting as much as half their income towards paying down their mortgage in some areas, with parts of Brisbane seeing the biggest debt levels in the state.
And it warned that the fallout of record property prices will see more locals forced out, especially up and down the coast, in the years ahead as cashed up interstate and foreign buyers move in.
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DFA head Martin North said even though Queensland may seem more affordable than southern states, price rises and recent trends mean “household debt compared to income is rising as fast as any state”.
Mr North said high demand from interstate migration would continue to support markets in the Sunshine, Gold and north Queensland coastal areas but it would be to the detriment of locals.
“Locals are being priced out of the market, and cannot compete with the large mortgages needed. Housing is more unsustainable than ever. These risks are structural, no easy fixes. I expect default rates to rise ahead.”
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He said in areas like Ipswich and Toowoomba, households were now under severe pressure, and lending was more limited.
“But,” he added, “some are putting 50 per cent of income to mortgage or rent. This is unsustainable.”
Mr North said the risks to financial stability off such high personal debt levels could force the government to intervene to protect prices ahead.
“Many are putting 40 per cent of their income on repayments, which is unheard of, and represent significant risk, given rates won’t be dropping soon,” he said.
“This can continue for now, as banks are being pretty loose with their lending, whilst supporting people with hardship schemes (which may not really help). In addition high demand and lack of supply will put a floor under prices though rate of growth is slowing and will continue to slow.”
“But,” he warned, “if inflation stays high, and so rates stay high, this is not sustainable”.
“Given the risks to financial stability I expect to see more Government intervention to protect prices.”
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Among the trends he’s watching are units across the capital, with Mr North warning “Brisbane apartments are very expensive and have high debt loads”.
An additional issue, he said, was a rise in strata fees as defects start to come to light.
“This will potentially change the market ahead.”
He warned that even those who have paid down their mortgages and have lower debt balances are under pressure to help children and grandchildren by taking on more risk and debt.
Mr North said many buyers would be unable to afford to buy a home without significant help from family.
“Those buying for the first time are often (about 40 per cent) using bank of mum and dad to assist with deposit,” he said.
“Others are taking loans with a longer repayment period (so the bank gets more interest over life of the loan), go interest only – which does not repay capital, or just are prepared to put more of the disposable income to pay the loan.”
Originally published as 330 suburbs: How much Qld homeowners really owe the bank
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