A broker in the worst-hit region for delinquencies in Australia is placing the blame on “impulsive” holidaymakers.
Nelson Bay in NSW was identified as having the highest delinquency rates in Australia by Fitch Ratings.
Ben Eick, of Hunter Home Loans Solutions in Nelson Bay told Australian Broker Online it wasn’t the fault of local residents.
“My understanding is that the properties are bought basically from people coming up here on holiday, liking the area, seeing an apartment or unit that looks fantastic,” he said.
He claimed the area enjoyed a boom in property purchases by holidaymakers during 2005 and 2006.
“[They thought] these places would keep appreciating…and of course what they’ve done since then is depreciate. And that’s where they’ve come unstuck.”
Eick believes changes in the rental market, making it harder for investors to “rent out the property for 40 to 50 weeks of the year” are a major factor.
“The rental market up here isn’t especially strong, as opposed to other areas that are driven by the mining industry further up the valley.
“It can have a direct effect on whether they can pay their mortgage,” he said.