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More Aussies own less of their homes


Mark Bristow

Mark Bristow


The number of Australian mortgage-holders with little or no real equity in their properties has grown over the past 12 months, according to figures from Roy Morgan Research, placing them at considerable risk if they must sell or prices decline.

Roy Morgan’s Single Source Survey found that approximately 8% (345,000) of mortgage holders in Australia own properties where the value of the home is less than or equal to the amount owing; an increase from 7.1% twelve months ago.

Mortgage holders in Western Australia were found to be the most at-risk, with 14% (71,000) having no real equity in their home. According to Roy Morgan, this can be partially attributed to the slowdown in the state’s mining sector, coupled with a decrease in house prices.

Proportion of mortgage holders where value of home is less or equal to amount owing:

State/Territory August 2016 August 2017
Tasmania 6.4% 4.9%
New South Wales 5.3% 5.6%
Victoria 6.6% 6.1%
South Australia 7.0% 7.6%
Queensland 7.6% 10.3%
Western Australia 10.7% 14.0%
National 7.1% 8.0%

According to Roy Morgan, the mortgage holders with little or no equity in their homes have much lower average house values ($501,000) compared to all mortgage holders ($761,000), in part due to higher-value homes being more likely to have had their mortgage for longer, and having required a larger deposit.

Roy Morgan Research industry communications director, Norman Morris, said that the growing number of borrowers with no real equity in their properties represents a considerable risk, particularly if home values fall or households are hit by unemployment.

“Other potential contributing factors to this increase in mortgage stress include borrowers maintaining debt for other purposes rather than paying off their loan and the use of interest only loans.”

“If home-loan rates rise, the problem would be likely to worsen as repayments would increase and home prices decline, with the potential to lower equity even further.”

“Although the majority of Australians with a mortgage have considerable equity in their home, speculation is emerging that the growth in house prices must soon come to an end and when it does, so will the growth in home equity.”

Roy Morgan’s annual Single Source Survey is based on over 50,000 interviews, including more than 10,000 with owner occupied mortgage holders.

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