Nelson Bay and Budgewoi on NSW coast still most delinquent postcodes in Australia: Fitch

The NSW coastal tourism and retirement towns of Nelson Bay and Budgewoi have retained their unwanted titles of Australia's most delinquent postcodes, according to the latest report by Fitch Ratings.

The Port Stephens suburb of Nelson Bay in the Hunter region of NSW has a delinquency rate of 7.8% as of March 2012 for mortgages more than 30 days in arrears – unchanged from the last survey by Fitch six months ago.

This is nearly five times above the national average of 1.6%, up 18 basis points from 1.42% in September 2011.

The seachange Nelson Bay district includes the areas of Corlette, Fingal Bay, Nelson Bay and Shoal Bay and has been among the worst-performing postcodes since Fitch first published its report in 2007.

Fitch blamed the high delinquency rate in Nelson Bay on “stagnation in the local housing market, which lead to an accumulation of arrears in the 90+ day bucket”.

“The stagnation in the local housing market has increased the time required for foreclosed properties to sell, leading to an accumulation of arrears in the 90+ day bucket (4.57% as of March 2012).

“Furthermore, properties that are in arrears tend to be high-value properties, where the mortgage balance is on average almost three times the average loan balance in Nelson Bay,” says Fitch.

Notably Surfers Paradise, the epicentre of the struggling Gold Coast property market rose from sixth to third most delinquent post code by value with its arrears rate rising from 3.9% to 4.1%

Cessnock in the Hunter region rose from 15th to 8th most delinquent post code by value with its 30 days plus arrears rate rising from 3.4% to 3.9%. Two years ago it had a delinquency rate of 2.56%.

RP Data's Tim Lawless says all struggling markets have in common "some material declines in values".

Eleven of the 20 worst performing suburbs were located in NSW, seven of which were around Sydney, predominantly in the traditional mortgage belts of south-west and western Sydney.

The-worst performing postcodes — such as Hoxton Park (2171), Eagle Vale (2558), Rooty Hill (2766), Macquarie Fields (2564), and Green Valley (2168) — are all in Sydney’s outer west, located in or nearby Fairfield/Liverpool.

Outer=western Sydney ranked as the ninth worst-performing region by value and 10th worst by number of delinquent mortgages.

Fairfield/Liverpool ranked the most delinquent region in Australia with 2.82% of mortgages more than 30 days in arrears.

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Budgewoi on the central coast remained the worst performing suburb by number of mortgages in arrears, with 33 borrowers out of 1,000 in delinquency as of March 2012, followed by Surfers Paradise (QLD), Eagle Vale (NSW), Cessnock (NSW), Nelson Bay (NSW), Crestmead/Marsden (QLD), Beaudesert (QLD), and Helensvale (QLD).

For the first time, two of the 20 worst-performing postcodes by number of mortgages in arrears were located in Victoria (Corio,\ and Wyndham Vale). In South Australia, Salisbury was the worst-performing postcode, with 25 borrowers out of 1,000 in delinquency as of March 2012.

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The figures are compiled before the May and June cash rate cuts (a combined 75 basis points) which may have subsequently helped borrowers better manage their mortgage repayments.

Fitch says interest rate movements are usually reflected in mortgage performance with a three to four month lag.

“Regions in which serviceability is key to mortgage performance are expected to benefit the most,” says the credit ratings agency.