Pilbara mortgage default risk high

Tom ZaunmayrPilbara News
Bulgarra suburb and sports grounds.
Camera IconBulgarra suburb and sports grounds. Credit: Pilbara News, Tom Zaunmayr.

Karratha has been identified among a list of Australian postcodes most at risk of mortgage default this year as house prices in the region hit rock bottom.

Digital Finance Analytics data ranked Karratha households most likely to default on mortgage repayments on a list of 20 wealthy Australian suburbs experiencing financial strain. DFA estimated 151 borrowing households in Karratha would default on mortgages in 2017, with each borrower experiencing a 6.2 per cent probability of defaulting.

Ray White Karratha licensee and Real Estate Institute of WA Karratha chairman Richard Naulls said he expected more mortgagee sales this year but we had been through the worst of it.

“At one point about 25 per cent of market listings were mortgagee sales — I think that is down below 10 per cent at the moment,” he said.

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“Inquiries from mortgagees to do appraisals has dropped right off in the past three to six months, so hopefully that is a positive.

“Number of sales has increased, number of multiple offers on properties ... is increasing, and number of listings coming on the market has decreased.”

Mr Naulls said he expected house prices to remain steady this year before picking up in 2018.

DFA principal Martin North said the estimated default rate in Karratha for 2017 had risen from 1.7 per cent of borrowing households in 2016.

“The reason is the incomes are under pressure, and after the mining boom we are seeing something of a correction in property values,” he said. “Employment is under pressure and costs of liv-ing are rising fast but the killer is the expected lift in mortgage rates.”

The data was compiled by household surveys taking into account factors such as expected rate rises and changes in employment.

The DFA list ranked Mandurah (4.17 per cent) and Mt Melville (4.16 per cent) borrowers as second and third most likely to default.

Nine of the 20 postcodes on the list were from WA. Seven were from Queensland.

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