Gold Coast trumps Sunshine Coast as most delinquent Queensland coastal market
The Gold Coast East mortgage delinquency rate improved slightly over the last six months to the end of March, but it still trails the Sunshine Coast by a significant margin, according to Fitch Ratings.
The two Queensland coastal markets have been among the most troubled housing regions in Australia since the GFC.
Fitch Ratings record that delinquency rate on the Gold Coast improved by 15 basis points as borrowers noting that borrowers in this region are less sensitive to interest-rate movements.
It records a delinquency rate of 2.29% (borrowers more than a month behind on mortgage repayments) for the Gold Coast East market, which comprises those suburbs along the coast including Surfers Paradise, Broadbeach and Mermaid Beach, making it the third most delinquent region in Australia after Liverpool-Fairfield in greater western Sydney and the NSW Central Coast.
The Sunshine Coast’s delinquency rate remained unchanged at 1.9% over the six months to the end of March with Fitch noting that the Sunshine Coast shared the same trend in delinquency rates as Gold Coast East over the 18 months to end-March 2013.
“However, as of this date, the Sunshine Coast was no longer among the 10 worst-performing regions in Australia,” says Fitch.
In comparison Gold Coast East has been the worst-performing region in Queensland since 2008 with “declining house prices have had an impact on the credit profile of leveraged buyers, attracted to the region by expectations of short-term property gains and high rental yields”.
“Declining house prices also increased the time required to sell foreclosed properties, leading to an accumulation of delinquent loans in the 90+ day bucket. Almost half (1.22%) of all delinquent loans (2.29%) were delinquent for more than 90 days as of end-March 2013.
“Of more concern is that the number of delinquent obligors has remained high since end-March 2011 in contrast to the rest of Australia.
“A total of 16 loans out of 1,000 were non-performing in these two regions at end- March 2013, the same level since end-March 2011,” says Fitch.
In terms of postcodes, Surfers Paradise ranks as the 10th most delinquent postcode in Australia with an arrears rate of 3.4%, an improvement from 4% six months ago.
Recent mortgagee sales on Surfers Paradise include a one bedroom unit on Monte Carlo Avenue, which sold for $168,000 in April last year through Ross Kachel of Harcourts – Runaway Bay. It previously sold for $195,000 in March 2010 according to RP Data.
However, there are no Sunshine Coast locations among the 20 worst performing postcodes.
The closest is Caboolture Shire – in between Brisbane and the Sunshine Coast - which recorded the highest increase in 30 plus days delinquency rates across all regions of Australia in the six months to March, with its delinquency rate increased by 71 basis points to 2.28%.