Negative prospects for homes
It’s showtime for road-safety truck
MORE than 35 per cent of homebuyers who purchased properties after 2008 face the scary prospect of being in negative equity.
Analysts warn those homeowners with negative equity – their house being worth less than they paid for it – are likely to stay in that position for five or six years as property values remain ‘‘soggy’’.
The damaging report comes as the Reserve Bank released the minutes from its October meeting, pointing to further rate cuts on Melbourne Cup Day.
Despite hopes of a spring property recovery in the property sector, the JP Morgan report released yesterday shows large numbers of aspiring buyers are being locked out of the market as banks lift their lending requirements post-GFC.
The level of new monthly mortgages being written has dropped from about 60,000 pre-GFC to around 45,000 this year.
And Digital Finance Analytics principal Martin North warns house prices are likely to remain weak for years as they remain historically high compared with average income.
The locations hardesthit by negative equity are the Gold Coast and Tasmania, with the report qualifying negative equity as any house that has seen its value grow by less than 10 per cent – below inflation – in the past four years.
Since 2008, the national average home price has risen almost 10 per cent from $ 375,000 to $412,000, according toRP Data.
But in the same period, negative equity jumped almost six-fold nationally, from about six per cent of homes bought be- fore 2008 to a whopping 35.6 per cent of homes acquired in the past four years.
The data shows every second home in Queensland (54 per cent) purchased since 2008 had little or no equity, compared with only 10 per cent before 2008.
Tasmania was close behind at 43.1 per cent post- 2008, compared with only five per cent before that date.
In Victoria, the rate is 29.8 per cent and South Australia, 41.3 per cent.
New South Wales is the lowest at 24.5 per cent.
JP Morgan banking analyst Scott Manning said despite interest rates at their lowest in three years, borrowers were finding it harder to get funds.
‘‘Home owners are being locked out of the market reflecting softer house prices and tighter funding conditions,’’ he said. WITH the Royal Geelong Show starting tomorrow, VicRoads has started a campaign to make the highways safer.
The Road to Respect campaign, housed in a truck, aims to teach car and truck drivers to share the road safely.
The truck features interactive exhibits and presentations to teach better road sense.
Games inside the truck include a gear change challenge and a stopping distance game.
The Road to Respect was launched at Birrarung Marr, Melbourne, on September 4 and has since been to Chadstone Shopping Centre, Mildura, Bendigo, Royal Melbourne Show, Elmore Field Days and Yarrawonga Agricultural Show.
The Royal Geelong Show starts at 8am tomorrow.
Come down to see the Road to Respect truck and talk to campaign driver Glen Schmidtke, who has been driving trucks across mainland Australia for more than 30 years.
To learn more about how to drive safely and share the road with trucks, go to VicRoads’ website at vicroads.vic.gov.au.