http://www.perthnow.com.au/business...-negative-equity/story-e6frg2ru-1226247640456Report authors and RP Data researchers Tim Lawless and Cameron Kusher said that almost 5 per cent of homes nationwide were in negative equity.
“4.9 per cent of all Australian homes are currently valued at less than purchase price,” the report said.
“The negative equity figure has risen from 3.7 per cent at the end of the last quarter.”
The report cited far north Queensland, the Gold Coast and the Sunshine Coast as having the highest instances of negative equity at 20.2 per cent, 14.0 per cent and 13.5 per cent respectively.
“Western Australia’s Lower Great Southern and South West and South Eastern Western Australia are showing high levels of negative equity,” the report added.
"On a state-by-state basis, Queensland has the greatest percentage of properties in negative equity at 9.2 per cent, up from 6.3 per cent last quarter.
"Western Australia also has a relatively high instance at 6.3 per cent up from 4.9 per cent of properties last quarter."
As I pointed out in a recent post on my blog this development is only going to act to further dampen the market. It will put recent high LVR buyers in a position where they are unable to or find it difficult to upgrade (potentially having to take on unsecured debt to fund their exit from one house before buying the next). Many of the FHBs who were lured into the market during the FHOG Boost period will be unable to upgrade and this flow on effect will reverberate through the rest of the market. Volumes are already at dismal levels in most markets and things only look set to get worse...
[Note: I believe RP Data's calculations are on sale vs resale prices of the same properties, negative equity technically is when the value falls below the mortgage amount]