Non-mining unemployment hurting regional mortgage repayments: Moody's
Some 28 of Australia’s 65 regions are now considered to have high mortgage delinquency, with non-mining unemployment hurting regional home owners.
Moody's Investors Service says the ability of Australian home owners to keep up with their mortgage payments has declined over the past year.
“Mortgage performance has shown a material deterioration," says Arthur Karabatsos, a Moody's vice-president.
Between March 2010 and June 2011, the national delinquency rate rose from 1.36% to 1.67%, given an especially poor performance in the regions.
"Of Australia's 65 regions, those performing very poorly, that is, with more than 2.5% delinquencies, increased to 11 from two, and those performing poorly increased to 17 from five," says Karabatsos.
Moody’s classified 11 regions as performing very poorly, with six from New South Wales, four from Queensland and one from Western Australia.
"NSW remains the worst-performing state overall, with six of its regions performing very poorly," Karabatsos says.
But the biggest declines in mortgage performance have been experienced in Queensland and WA, the two states that have been the biggest beneficiaries of Australia's ongoing mining boom, the report says.
“Previously all Queensland regions performed satisfactorily or better, but now four regions are performing very poorly.
“And before only one of WA's seven regions was performing poorly and now it is four performing poorly and one very poorly,” says Karabatsos.
"This apparent paradox is partly explained by the fact that non-mining jobs still account for most of the employment in both states, and such sectors lag the mining sector in growth.
“For example, the strong Australian dollar has weakened the tourism industry, which accounts for more than 5% of employment in Queensland," Karabatsos says.
"Overall, mining accounts for just 1.8% of employment in Australia, and then 2.4% in Queensland and 7.1% in WA.
“Now QLD's tourism-dependent Gold Coast region not only has Australia's third worst mortgage performance with 3.11% delinquencies, but also contributes the most delinquent loans outright, with 6.9% of such loans in Australia located in the region," adds Karabatsos.
"And, previously, while all of Victoria's regions were satisfactory or better, two now perform poorly.
“By comparison, South Australia is the best-performing state, with all of its regions performing satisfactorily," says Karabatsos.
Source: Moody's
The report shows that the worst performing postcode is in WA – postcode 6168 encompassing suburbs such as Rockingham, Hillman, Garden Island and Peron some 30 kilometres south of Perth – which has a delinquency level of 5.31%, more than three times the national average of 1.67%, as calculated by Moody's.
