Queensland hit hardest post-GFC as 6.3% of homes worth less than their purchase price

Jonathan ChancellorSeptember 27, 2011

About 3.7% of Australian dwellings are now worth less than their original purchase price, according to a comprehensive RP Data analysis.

The decline in property prices following the global financial crisis has had its biggest impact in Queensland, where about 6.3% of all properties are in negative equity.

Queensland is followed by Western Australia, where about 4.9% of properties are worth less than the owners paid.

The Queensland districts with the highest negative equity are far north Queensland, the Gold Coast and Sunshine Coast.

For homes purchased from 2008, the RP Data findings show that 7.7% are now worth less than what the owner paid.

An estimated 13.3% of post-GFC buyers in Queensland are likely to be in negative equity, with the property likely to resell at less than its purchase price.

Queensland is followed by Western Australia with 9.6% in negative territory post-GFC and Tasmania with 9.5% negative equity since the 2008 economic downturn.

“The global financial crisis began affecting housing markets in 2008,” Tim Lawless, RP Data national research director, says.

“The home owners that are at the greatest risk of home values moving below their purchase price are those that have purchased since 2008,” Lawless says.

The Australian Capital Territory was ranked as the least affected, with just 1% showing negative equity. Victoria followed, with 1.8% of Victoria’s owners considered negative-equity households.

But the report concluded that 45% of home owners across Australia are sitting on a nest egg that’s worth at least double what was paid.

“Strong value growth in property over recent years has been the catalyst for most regions enjoying quite strong levels of equity,” Lawless says.

“Over the five years to June 2011 capital city home values have increased by about 30%, providing a significant wealth boost to most home owners during this period.

“More recently the Australian housing market has softened and home values are down 2.7% between their October 2010 peak and June 2011,” Lawless notes.

RP Data estimates that Australia’s residential housing market is now worth $4.56 trillion – almost four times the value of the $1.3 trillion Australian equities market.

RP Data’s report measures the difference between the original purchase price of a home and the current valuation for individual properties around the country.

The property valuations used in the analysis are based on RP Data’s automated valuations model, where the value of more than 8 million dwellings is regularly estimated across Australia.

The report does not factor in home owner debt levels.

Worst-performing areas

 

Best-performing areas

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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