Don’t fear the financial cliff.
We were initially told that Australia’s economy is heading for a financial cliff when government subsidies were to be cut back from September.
Remember...home loan repayment holidays were also set to stop in September but then the banks have extended them to March for customers still suffering a cash crunch.
And now some of the property pessimists are saying we've just kicked the can down the road and the housing market will be in trouble next year.
Not so according to ANZ Senior Economist Felicity Emmett in the latest research bulletin by the ANZ Bank which suggests the housing sector looks to be turning a corner according to
Here's what the research bulletin said:
While high housing debt may pose a risk next year in light of expected higher unemployment rates, the spike in household savings in Q2, particularly by indebted owner occupiers, suggests many households have increased their mortgage buffers.
On average, owner occupiers were less likely than renters to lose income and employment through the pandemic downturn.
The number of deferred mortgages is falling quickly.
At the peak, 11% of mortgages (by value) were on deferred payments.
As of September, APRA reports that this had fallen to 7%.
With the bulk of loan deferrals expiring in October, this number has fallen further.
Victoria has the highest rate of deferral, while NSW is closer to the national average.
Housing arrears in Australia have risen to around 1.2%.
This is only 0.2ppt higher than September last year.
ANZ 90+ day arrears data show that Victoria and NSW arrears rose modestly between March and September, but arrears rates in other states have declined through the same period.
RBA research suggests that housing arrears could rise to 2% as mortgage deferrals expire and unemployment continues to rise.
Our view is that accommodative lender measures and a lower peak in the unemployment rate will mitigate this risk.
The very low cash rate (0.1%) and increasing use of lower fixed rates for mortgages has eased mortgage servicing costs for many households.
Low interest rates, combined with deferrals and fiscal support including tax cuts, is likely to mitigate the labour market risks for financial stability in 2021.
Strong increases in saving rates by indebted owner occupiers suggest that many households now have significant buffers.
The bulk of mortgage deferrals are likely to have already expired.
Lenders are likely to offer further support for owner occupier mortgage holders, and significant forced selling is unlikely.
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Here’s how to avoid these 12 common reasons property investors fail to build a Multi Million Dollar Property Portfolio
- Also read:Sydney property market forecast for 2024
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
Fiscal support, monetary easing and mortgage deferrals have mitigated the arrears risk through the pandemic downturn.
While average arrears rates in Vic and NSW have risen this year, arrears in other states have fallen.
Vic has the highest share of deferred mortgages, but NSW is closer to the average across the states.
Housing arrears in Australia have risen to around 1.2%, only 0.2ppt higher than September last year.
Fiscal and monetary support, alongside mortgage deferrals has helped limit the rise in arrears rates to date.
Borrowers who work in pandemic-hit industries were more likely to defer mortgages than other types of households.
RBA research suggests that housing arrears may rise to 2% as these mortgage deferrals expire and unemployment continues to rise.
However, we think it is more likely that loan restructures and other lender forbearance measures could mitigate this risk.
How risky is Australian household debt? High debt largely reflects high ownership, but risks to the consumption outlook remain.
Source: ANZ Research – Housing: A strong 2021 -16th November 2020
If you're wondering what’s ahead for property you are not alone.
You can trust the team at Metropole to provide you with direction, guidance and results.
In “interesting” times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that's what you exactly what you get from the multi award winning team at Metropole.
If you're looking at buying your next home or investment property here's 4 ways we can help you:
- Strategic property advice. - Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! This will give you direction, results and more certainty. Click here to learn more
- Buyer's agency - As Australia's most trusted buyers’ agents we've been involved in over $3.5 Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective - that's something money just can't buy. We'll help you find your next home or an investment grade property. Click here to learn how we can help you.
- Wealth Advisory - We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
- Property Management - Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.