The most delinquent town in Australia says it's not that bad

The Rockingham property market is not in distress, but showing some signs of struggle, according to recent sales data and observations from mortgage brokers and estate agents.

According to Moody’s latest mortgage delinquency report for post code 6168, comprising the suburbs of Rockingham, Cooloongup, Garden Island, Hillman and Peron, has a 30-day-plus mortgage delinquency rate of 5.31%, three times the national average of 1.67%.

Borrowers living in the post code are also the most heavily geared, with loan-to-value ratios of 86.5% on an average loan balance of about $172,000.

The neighbouring postcode 6167 (encompassing suburbs such as Bertram, Kwinana Beach and Parmelia) rated fifth with 5% of borrowers 30 days or more delinquent.

Joe Desousa, principal of Aussie Home Loans in Rockingham, says he has not noticed any higher rates of delinquencies and says refinancing work is easier than it has been for the last two years.

He says if the 5% arrears figure were for 90-day-plus delinquencies that would be cause for concern.

“A borrower being 30 days in arrears means they have missed just one payment, which could just be due a problem with a direct debit as happened with one of my clients today,” he tells Property Observer.

Val Pagett, a Mortgage Choice broker in Port Kennedy, Secret Harbour and Warnbro, has a different story to tell and says some borrowers are “struggling like crazy” due to falling property values at the lower end of town.

“People are getting into strife because when they try to consolidate their debts, they find the values of their homes have declined so they have no equity,” she says.

“Some homes in Rockingham and Warnbro have dropped $60,000 to $70,000 in value.”

According to Pagett, properties values are coming down by mortgagee sales in the area.

Realestate.com.au lists just under 2,000 properties for sale in postcode 6168, with five listed as mortgagee sales. A key word search using the word “reduced” brings up 65 listings.

Recent sales suggest houses and apartments located near the ocean have sold at or below their original listings prices.

According to RP Data a one-bedroom apartment on Rockingham Beach Road listed at $475,000 in early May sold two weeks later for $410,000.  It last sold in 2004 for $330,000.

A three-bedroom apartment on the same street sold for $940,000 in February having been listed for sale at $1.25 million in January 2009. It last sold for $745,000 in May 2004.

A little further away from the beach, a three-bedroom house on Seawind Drive sold for $447,500 in May just above its listing range of $445,000 to $465,000 in March 2010.

Land is also selling cheaply.

A 291-square-metre plot of land just one street from Cockburn Sound sold for $375,000 in April, having been listed in February for $425,000

James Eaves from the Mortgage Gallery in Rockingham says he was shocked to read about the high arrears rate.

He says many borrowers fly in and fly out of the area and earn healthy incomes working on the mines.

“It’s a blue-collar area, the average loan size is around the $400,000 mark,” he says.

According to Eaves, those in trouble might be borrowers who bought at the height of the boom and are trying to sell at the bottom of the market.

Estate agent Jim Baker from LJ Hooker Rockingham says from his point of view the market has not softened drastically.

“Properties in the right location, well presented and at the right price are moving. I have sold three this month,” he says.

He says the primary appeal of Rockingham is its beaches and recreational opportunities.

“Investors are popping their heads out,” he says, with demand for rental properties coming from the nearby naval base.

He also notes a lot of “fly in, fly out” renters who work in Port Headland but set their families up in Rockingham.

“Rents in Port Headland can be $1,000 a week. In Rockingham $400 gets you a three-bedroom house.”

Roger Moorhouse, co-owner of Fruit Property, describes the market as fairly “tight and tough” but says houses do sell if priced correctly. He has dealt with a few mortgagee sales but says they equate to less than 1% of sales and the percentage has not increased.

Recent figures suggest the WA market as a whole is struggling.

According to the latest WA Supreme Court statistics, there has been a 28% increase in the number of homes repossessed in the last financial year – 1,242, or more than three per day – compared with the same period a year ago.

A report by RP Data says recent property price declines have largely contributed to the state's high level of negative and low equity.

Moody’s does not provide 90-day-plus arrears data.