Every QLD LGA: How ‘mortgage stressed’ is your region?

Half of all Queensland households could soon be “mortgage stressed” as Brisbane emerges as the nation’s most under pressure city. SEARCH THE INTERACTIVE

More than 40,000 Queensland households could join the “mortgage stress” club if the Reserve Bank of Australia increases the official cash rate next week, with Brisbane emerging as the most stressed region in the nation.

A whopping 43.5 per cent of Queensland households were believed to be “mortgage stressed” at the end of October, with that number tipped to increase to 49 per cent if the central bank increases the official cash rate to 4.35 per cent on Tuesday.

Brisbane is the most mortgage stressed LGA in the country (AAP Image/Darren England)

Exclusive analysis shows that even a 0.25 percentage point increase could tip another 42,282 Queensland households into financial stress, with another 38,317 set to join them if the RBA imposes another pre-Christmas blow to budgets at its final meeting of the year on December 5.

It comes as real estate agents report a spike in the number of contracts crashing on finance, with borrowers also impacted by the financial impost.

Digital Finance Analytics (DFA) principal Martin North, who has been tracking the income and debt from a rolling sample of about 52,000 households since 2001, said a perfect storm of rising borrowing costs and house prices, cost of living pressures and stagnant wages had made homeownership challenging for many.

The research shows that of Queensland’s 766,695 borrowing households, 333,439 are already feeling the pinch, up from 279,385 at the start of the cycle back in May last year.

And the Brisbane local government area (LGA), despite being relatively affordable compared to Sydney and Melbourne, was the most mortgage stressed region in Australia, according to the analysis.

Sydney may be more expensive than Brisbane but the wages are also often higher, so migration out of Sydney and Melbourne has put interstate buyers in a better position than many locals. Photo – iStock

Roughly half (101,789) of the city’s 204,518 borrowing households were already feeling the heat in October, with another 12,791 poised to join them if another rate rise occurs.

Back in May 2022, when the first rate hike was introduced, rising from a record low 0.1 per cent to 0.35 per cent, 83,535 Brisbane household were feeling the pinch.

Mr North said that his analysis looked at the difference between income and living costs.

“The (Queensland) market has seen a significant uptick in prices, so buyers need bigger loans to buy, compared with average incomes which are lower than Sydney or Melbourne,” he said.

“Debt councillors tell me the distress is broad based from recent first time buyers, through to affluent, and older owners.”

But Mr North said the RBA “must kill off inflation” or risk financial pain for longer.

“The longer interest rates and inflation stay high, the more stressed households will decide to sell, or will drift into default,” he said.

In Queensland, all of the top 10 most stressed LGAs are in the southeast, except for Cairns (9) and Townsville (10).

The southeast corner was a magnet for cashed-up interstate buyers moving to the region during the pandemic, with the increased competition for limited stock pushing up prices.

And that is not just having an impact on sellers, but also on borrowers as borrowing capacities tank with each rate hike.

A number of houses across Queensland are back on the market after a previous contract crashed.

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Harcourts Unite Moreton Bay agent Gina Kirkland said that almost a quarter of the contracts signed with their office in September had fallen over on finance.

“Our office has really been pushing for auctions because there is not that element of concern around finances,” she said.

“And we still have sellers out there who are overpriced at a time when borrowing capacity has been hit hard.

“Buyers may want to spend $800,000 but can only borrow $750,000 now.

“It is tough out there.”

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It is a trend that RE/MAX Success Toowoomba agent Jacqui Walker has seen it first hand.

“Rates have increased and while buyers had that pre-approval, that may not apply if the rates have increased,” she said.

“They just can’t borrow at the same level and that’s devastating for them (buyers) and also the sellers, who are often buying on the condition of a sale so it has this chain reaction.”

Ms Walker estimated that about 10 per cent of sales in the Toowoomba region were collapsing based on finance, but added that the “market is still very good, very positive”.

“We are still seeing lots of excellent sales going ahead without a hitch at all,” she said.

Carolans First National Real Estate Nambour agent Andi Sharma said that while crashed contracts were still limited in his region, he had seen an uptick elsewhere.

“Generally speaking my sales are sub-$800,000 but many of those buyers now can only borrow $650,000-$700,000.

“Trying to find anything now in that price range is next to impossible.”

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Mr Sharma said that he was struggling to help even his own family in the current market.

“My son and his wife are teachers and they can’t afford to be in Brisbane,” he said.

“They are looking at commuting from Ipswich to Mount Gravatt.

“It is grim! We are in the real estate business and can’t even help our grandchildren.”

The latest PropTrack Home Price Index revealed that Brisbane led the nation in home price growth over the past month, with values hitting a new record high.

The report revealed that the city’s unit and house prices combined gained another half a per cent in October to hit a new median price peak of $773,000 — almost as high as Melbourne’s at $815,000 median.

“If prices continue to grow at the pace of the past quarter in Brisbane (1.98 per cent), they will end the year up a little over 9 per cent,” PropTrack economist Eleanor Creagh said.

PropTrack senior economist Eleanor Creagh Photo: Supplied

RateCity.com.au research director Sally Tindall recently warned that the big four banks were now all in agreement that a 0.25 percentage point increase was likely next week.

“A rate hike of 0.25 percentage points would take Australia’s cash rate to the highest level since November 2011 and put many borrowers in a tricky position,” she said.

She warned that another rate hike could also potentially hit borrowers next month.

On the flip-side, the LGAs with the lowest mortgage stress were in the west, and included places such as Longreach, Paroo, Barcaldine, North Burnett and Balone.

Rockhampton was the least stressed LGA of the major regions.

But even those least stressed regions have seen an uptick in households feeling the mortgage burn.

Of the LGAs with complete data, of the 273 borrowing households in Barcaldine, 158 were potentially feeling stressed in October, up from just 20 at the start of the latest rate cycle.

It is a similar story in North Burnett, where 162 of its 1068 borrowers are now considered to be mortgage stressed, up from 88 in May last year.