Property danger zones back in spotlight

by Miklos Bolza11 Oct 2016
Banks are asking home buyers for deposits of up to 30% as financial danger zones spread beyond Australia’s mining towns.
In Queensland, National Australia Bank is now keeping a watch on the Brisbane CBD as well as southern suburbs near the Gold Coast, according to the Courier Mail.
An oversupply of units in the state’s capital is having a negative impact on the economy while the overall unemployment rate has yet to reach its peak.
The paper reports that National Australia Bank has flagged Brisbane as well as the suburbs of Oxenford, Guanaba, Maudsland and Wongawallan.
Elsewhere around the state, the bank has advised its brokers to secure high loan-to-valuation ratios for buyers in Binna Burra, Beechmont, Gladstone, Blackwater, Emerald, Mackay, Moranbah, Glenden, Dysart, Bowen and May Downs
In the banking inquiry three days ago, NAB CEO Andrew Thorburn said that there were around 50 “high-risk postcodes” across Australia that the bank monitors very carefully.
These were mainly focused in Queensland and Western Australia as well as the inner city apartment areas of Sydney and Melbourne.
To stem the risk, NAB had “quite a sophisticated, advanced risk management monitoring system,” Thorburn told the inquiry.
When asked whether NAB worried about contributing to a housing bubble in Sydney, the CEO answered: “Absolutely we do think through scenarios in high-risk areas.”
NAB takes a range of economic factors into account and regularly monitors the performance of local markets, a bank spokesperson told Australian Broker.
“We recognise that no two suburbs are the same, and there are some geographic areas across Australia which have been impacted by local economic conditions,” they said.
“As a responsible lender, we adopt strategies in these geographic areas that seek to reduce the risk to our customers and our business.”