PHOTO: Home owners think to sell as property prices slump. Source: Getty
Even though the first tiny falls in property prices were only confirmed yesterday, it appears that mortgage-holders are, well, panicking.
New research by comparison house mozo.com.au has revealed that hundreds of thousands of owners are still intending to apply for a repayment holiday, worried about how they’ll afford it when a holiday ends and/or intending to sell to avoid the slump they see coming.
Of most concern to them is the possibility of ending up owing more than their house is worth, what’s called negative equity. This is the big fear of more than half of the 1454 Australians mozo surveyed between April 16 and 20.
Nearly half of respondents are considering repayment holidays but, tellingly, 89 percent are worried what will happen when the holiday is over.
Why? Because one-in-four mortgage holders surveyed have recently lost their job, while one-in-five have taken a pay cut.
Why negative equity?
Of course, the other side of the negative-equity equation to how much mortgage holders owe, is what the property on which their debt is secured is worth.
And this is where the real anxiety comes in. Of those with a mortgage, more than half (56 percent) are worried about negative equity due to house price falls, with 39 percent worried about their house significantly decreasing in value.
In fact, nearly a quarter or respondents believe a significant downturn is coming and intend to sell their property.
This is quite a shocking statistic. And it’s a time-and-place thing that will hopefully steady and recede once some certainly returns to our COVID economy.
But, in particular, to the jobs market.
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