Sunday, July 01, 2007

Surge in families forced to sell their homes

Looks pretty grim for the economy, for families, and for the housing boom. Naturally the politicians who pride themselves on 'managing the economy' when times are good (which is an outright lie anyhow at any time) shut up when this sort of thing happens. Never mind that half the reported GDP growth of recent years has been empty inflationary lending on housing at high, unsustainable prices.

HUNDREDS of families have been forced to sell their homes, or lenders have repossessed and auctioned them, in Sydney's west and south-west in the past year, property experts say.

There were a record 1400 auctions in the region in the year to March 31, nearly double the number in 2005, Australian Property Monitors figures show.

Michael McNamara, an analyst with the company, said the spate of auctions pointed to a big rise in distressed sales and repossessions in the region. Mostly, sellers in Sydney's cheaper property markets were going to auction because they had to, not because they wanted to, he said. "The big rise in the number of auctions isn't because the market is going well," he said.

"It's jumped because auctions are the preferred method of sale of trustees in bankruptcy and mortgagees in possession. I think that's a very disturbing figure."

The median price for an auction in south-western Sydney in the March quarter was $318,000, $22,000 less than the overall median house price in the region.

"This just brings home the fact that most of these are distressed sales," Mr McNamara said.

Dara Dhillon, the principle of Dhillon Real Estate in Ingleburn, near Campbelltown, said 95 per cent of auctions in south-western Sydney were mortgagee sales. But he said there were many more forced sales where lenders had encouraged borrowers to sell rather than face repossession. "This type of [forced sale] is a big proportion of sales at the moment," he said.

Mr McNamara and Mr Dhillon estimate that hundreds of families in western and south-western Sydney had been forced to sell their homes, or had had homes repossessed and auctioned by lenders, over the past year.

Meanwhile, the total debt burden on Australian households topped $1 trillion for the first time last month, Reserve Bank figures published yesterday showed.

Debt on housing accounts for about 86 per cent of household debt, with the remainder personal debts like credit cards and personal loans. The ratio of household debt to household income has reached 160 per cent, one of the highest in the world. Interest payments now soak up a record 11.9 per cent of household income, nearly three percentage points more than in 1989 when mortgage rates were 17 per cent.

Surge in families forced to sell their homes

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