Six-month mortgage repayment holidays will end in September while the unemployed on JobSeeker will also see their coronavirus supplement reduce by more than a half
Home owners in Australia could be forced to sell their houses this month if they can’t service their mortgage repayments.
Six-month mortgage repayment holidays are ending in September while $1,500 a fortnight JobKeeper wage subsidies are being scaled back to $1,200 for full-time workers.
The unemployed on JobSeeker will also see their coronavirus supplement more than halved from $550 to $250.
Financial comparison website Canstar’s group executive Steve Mickenbecker feared this cocktail of hardship could force home owners to sell, even though the Reserve Bank of Australia this month left interest rates on hold at a record low of 0.25 per cent.
September is the turning point for many homeowners and investors hoping to see the year out in better shape and avoid selling their property under duress, he said. With JobKeeper and JobSeeker winding back from September and many mortgage holders nearing the end of repayment pauses with their banks, September will be a testing time.
The news is particularly bad in Melbourne, with median house prices in August declining for the fifth month in a row as the city was placed into a strict, Stage 4 coronavirus lockdown with an 8pm to 5am curfew.
Melbourne’s mid-point values last month fell by 1.4 per cent to $781,888, CoreLogic data showed.
Prices in wealthier suburbs, however, fell by 1.9 per cent compared with 0.6 per cent in poorer areas of the Victorian capital.
Reserve Bank governor Philip Lowe was particularly worried about the Melbourne lockdowns holding back a jobs recovery – with official national accounts data due out on Wednesday expected to show the first official recession since 1991.
This recovery is likely to be both uneven and bumpy, with the coronavirus outbreak in Victoria having a major effect on the Victorian economy, he said. The virus outbreak in Victoria and subdued growth in aggregate demand more broadly mean that it is likely to be some months before a meaningful recovery in the labour market is under way.
In Sydney, median house prices fell by another 0.5 per cent to dive back below the psychological $1million mark for the first time since the COVID-19 pandemic began – sinking to $985,723.
House prices were flat in Brisbane, Adelaide and Perth.
They rose by 0.5 per cent in Canberra, 0.3 per cent in Hobart and by 1.1 per cent in Darwin.
CoreLogic’s head of research Tim Lawless said regional markets that were less reliant on immigration before the COVID-19 pandemic were likely to better withstand the coronavirus recession.
Unlike their capital city counterparts, which usually receive 85 per cent of net overseas migration, most regional markets have avoided the drop in demand caused by the pause in migration, he said. Regional markets may also be appealing for their relatively low density and lower price points.
New working-from-home arrangements could also see more people leave the big cities for a regional area.
The normalisation of remote work through the pandemic could make proximity to major cities less of a factor in home purchasing decisions, Mr Lawless said.
Despite the COVID-19 gloom, home prices have hit record highs in parts of regional Australia from the Gold Coast in Queensland and the Richmond-Tweed area of northern New South Wales to Coffs Harbour on the NSW Mid-North Coast and south-east Tasmania.
While mortgage repayment holidays are due to end in September, home borrowers can negotiate a reprieve until March 2021 with their bank.
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