Three Northern Beaches suburbs are in the Sydney’s ten most likely to experience a mortgage default.
Research by Digital Finance Analytics determined that Bayview, Duffys Forest and Freshwater rank sixth, eighth and ninth most likely in Sydney to be at risk of a mortgage default.
Housing on the Northern Beaches has experienced strong demand this year despite lockdowns, with some properties selling without an inspection from the buyer.
Residential property price data released by the Australian Bureau of Statistics shows that Sydney property prices increased 8.1 percent in the June quarter alone, with a full year increase of 19.3 percent.
The burden of servicing home loans has been brought into focus with many people experiencing reduced income and financial stress as a result of COVID-19 pandemic induced lockdowns.
In December 2020, the Australian Competition and Consumer Commission (ACCC) released the Home loan price inquiry report which looked at making home loan switching easier.
The final report found a ‘lack of easily accessible, transparent and straightforward pricing information, resulting in high search costs; and unclear, uncertain, costly and lengthy discharge processes that in turn cause borrowers to give up looking for alternative products.’
The ACCC also found ‘borrowers can save thousands of dollars in the first year alone by switching lenders or products or asking for a better deal, with older loans around 58 basis points higher than the average rate for new loans. This could translate to a saving of over $34,000 over the life of a $500,000 loan.’
Northern Beaches Council data shows that more than half of residents (52 per cent) are paying loan repayments of more than $2,600 a month.
Home owner advocacy group Not Just A Number say that many borrowers feel trapped and powerless. Spokesperson Kate McQuestin said banks must deliver more transparent loan pricing and stop penalising loyal borrowers.
“Unfortunately, nearly a year later many existing customers are no clearer on home loan pricing. Many people are continuing to pay thousands of dollars more than what is being offered to new customers and feel powerless.
“Every dollar counts. Looking at an average loan rate, the big banks will penalise each existing customer around $2,000 this year and Australian customers don’t deserve to be slugged billions in 2021. This $2,000 the banks are pocketing could cover a family’s annual electricity or gas bill for a year, a trip to see their beloved family when the borders open. Now, more than ever, Aussies need this money in their wallets. Not the banks.
“There’s also a significant difference between what is advertised for new home loans and what consumers actually pay. And customers are still experiencing great difficulty in doing anything about it. We believe the need for clarity is more important than ever with the impacts of COVID-19 putting increasing pressure on Australian households.
“People are sharing stories of raiding supermarket bins, going without food and feeling mentally overwhelmed as they do everything they can to make ends meet in these uncertain times. We will also be doing our best to highlight the issues people are facing through the petition to the banks and Federal Government.
“We just want to help deliver a fair go for Aussie homeowners at a time when many are doing it really tough, starting with a clear view of what new versus existing customers are paying, so we can make an informed decision with all the facts,” said Ms McQuestin.
The issue of housing affordability has also caused a public spat between Federal Northern Beaches MP Jason Falinski and NSW Planning Minister Rob Stokes.
Mr Falinski, who has been appointed to chair a Commonwealth Parliamentary inquiry into housing affordability, recently wrote an opinion column for the Australian Financial Review (AFR) in which he said Australia is at risk of losing a generation of homeowners and with it, the vision Australia’s founders had for a classless society.
“The significance of homeownership in 1901 is not fully appreciated today. Back then, the class divide was about whether you owned land. Ensuring everyone had an opportunity to own their own home was about creating a classless society.
“Outside of Antarctica, we live on the least densely populated continent in the world, with one of the highest average weekly earnings among the OECD nations. Yet, we still have the least affordable housing markets on the planet.
“If you are under 40, you are less likely to own a home than at any time since 1947. When updated census data becomes available, this is likely to be since 1901. Let us be clear, this is a fundamental betrayal of one generation to the next,” said Mr Falinski in the AFR column.
These comments brought a public rebuttal from NSW Minister for Planning and Public Spaces Rob Stokes, who posted to Facebook, “We need to have a serious discussion about housing affordability but the idea that the planning system alone can solve housing affordability is ludicrous at best, wilfully negligent at worst. What we cannot do is compromise our standards. Minimum standards do not result in minimum prices.”
Minister Stokes also wrote a newspaper opinion column for the Sydney Morning Herald (SMH) in which he expanded on these thoughts.
“Federal politicians, developers, economists and large sections of the media are quick to blame all our housing affordability woes on slow supply, slow state planning systems and stringent controls. But the idea that the planning system alone can solve housing affordability is ludicrous at best; wilfully negligent at worst.
“The housing asset boom has been a global phenomenon during the pandemic. Australia places 11th in The Economist’s 28-country House Price Index of housing price rises over the 12 months to March 2021, at about 7 per cent, below New Zealand (at over 25 per cent), Canada, the United States, Britain, and Germany.
“Even American sunbelt cities, vaunted for their simplified and liberalised planning system, have seen sharp rises, such as 20 per cent in Houston and 27 per cent in Atlanta in the 12 months to May 2021.
“Planning can make important changes to the housing stock in the long term, but it cannot explain the huge price jumps we have seen. It simply makes no sense that at a time of historically low population growth and great economic uncertainty, the cause of escalating prices is insufficient supply.
“Low interest rates and high disposable incomes have both fired housing booms in the past, and both are true of the current conditions driving prices high now.
“The Federal Parliament’s inquiry into housing affordability and supply may well find some new insights, and I hope it does. But I’m sceptical it will find solutions not already found in the Henry Tax Review of 2010, the Productivity Commission’s inquiry of 2004, or the Prime Minister’s Home Ownership Taskforce of 2003, among other much-vaunted inquiries. All of these included recommendations – never taken up by the government of the day – which recognised the Commonwealth policy settings could have a substantial effect on affordable home ownership.
“What we cannot do is compromise our standards in response to the specious reasoning that house prices are so high because of the NSW planning system. In the long run, planning matters for the nature of our cities and communities – whether it be in sustainable design, diverse housing, or great public spaces. We must only accept the type of housing our city deserves. Minimum standards do not result in minimum prices,” said Minister Stokes in the SMH article.
With another 23k people expected to call the Northern Beaches home in the next 15 years, it is not expected that Northern Beaches Council’s Local Housing Strategy which plans for an increase of 12k new homes will ease prices.
It is clear that without a significant step change, first homebuyers will remain priced out of the local market, and pressure on families to take out larger mortgages to buy into the Northern Beaches is likely to remain.
Image: Northern Beaches Advocate