Greater Western Sydney replaces Gold Coast as most delinquent region: Fitch
The Fairfield-Liverpool region in the heart of the outer western Sydney growth corridor has regained the unwanted title of most mortgage delinquent region in Australia, according to Fitch Ratings.
The Gold Coast East region which includes the coastal suburbs of Broadbeach, Surfers Paradise and Mermaid Beach, temporarily replaced Fairfield-Liverpool at the end-September 2012 for the first time in seven years, but has now dropped to third most delinquent region following a small improvement.
Between September 30 and March 31 the proportion of mortgage holders more than 30 days behind on their mortgage repayments in Fairfield-Liverpool increased from 1.82% to 2.37% - around one in 42 borrowers.
The Fitch Ratings report indicates a wider problem managing mortgage repayments in western Sydney with outer south west Sydney ranking fifth (delinquency rate of 2.25%), Blacktown ranking ninth (1.98%) and outer western Sydney ranking 10th (1.96%).
The Gold Coast East 30 plus days arrears improved by 15 basis points to 2.29% at end-March 2013, but 90+ days arrears were still high at 1.22% (versus 1.14% in September 2012).
It ranked as third most delinquent region in Australia behind the struggling Central Coast retiree region between Sydney and Newcastle.
The top 10 worst performing region list is dominated by outer Sydney and Gold Coast regions, with Hume City in Melbourne’s North – lower socio-economic location – ranking eighth.
Fitch notes that Blacktown has returned to the 10 worst-performing regions list by value as delinquencies increased by 43 basis points in the six months to 31 March 2013.
Fitch Ratings analyst James Zanesi tells Property Observer that many borrowers in the Fairfield-Liverpool region would be classified as on lower incomes with less of a financial buffer to protect them from short term shocks such as unemployment.
He says more borrowers in this region fall behind on mortgage repayments due to Christmas spending, but then tend to cure their delinquency over the next few months.
He says lower income regions always perform worse than other regions, but the extent of the increase in the delinquency rate in Fairfield-Liverpoolwas unexpected.
