Australian Property News

Multi-tiered property marketing contributes to price drops and rising mortgage arrears rates

Posted on Wednesday, June 15 2011 at 3:45 PM

Multi-tiered property marketing is the 'elephant in the room' and a major contributing factor to Queensland's recent ranking as the number one most vulnerable state to mortgage stress, according to WBP Property Valuers.

Global credit analyst Fitch Ratings yesterday announced Queensland as the state taking the cake on mortgage arrears rates, with a two per cent average arrears rate of all mortgage holders on one or more repayments, and even edging up to 3.3 per cent in Logan City, particularly in Kingston, Crestmead and Marsden.

While the state's January floods have been considered a contributing factor to this ranking, independent property valuer Daniel De Pasquale of WBP Property Group said the areas hit hardest are growth corridors in fringe areas, where multi-tiered property marketing has also been actively penetrating.

In Morayfield, more than 40 kilometres north of Brisbane, where Fitch Ratings reports mortgage arrears rates are up around 1.84 per cent, De Pasquale said these rates coincide with a generally flat market but are also due to buyers originally paying too much for the property through multi-tiered property schemes, mostly via spruiking seminars.

He said many buyers have paid more than $40,000 over the market price for a new house-and-land package and it’s only when they revalue and attempt to resell through the local market that they’ve realised their predicament and the price is recorded as a fall.

The same scenario has happened in Brisbane’s south, particularly in Logan City and Gold Coast west, where Fitch Ratings reports mortgage arrears rates have hit an average of 2.1 per cent and 1.83 per cent respectively.

"They've bought stock not marketed through local demand which has screwed up the market and has been a big contributing factor to why the market has taken a step back," said De Pasquale.

Out-of-town buyers, particularly from the mines and interstate have been most vulnerable to these circumstances, he said.

De Pasquale said buyers should always personally inspect a property when they can and talk to local active agents and valuers about the property's market value to avoid this situation from ever happening.

He said the safest bet is to buy existing stock within 10 kilometres to the CBD.