MANY Mildura mortgage holders are downsizing or moving into rental properties as interest rate rises bite, according to a local real estate agent.
On Tuesday, the Reserve bank lifted the cash rate 25 basis points, the first rise in four months.
The increase is another hit to mortgage holders, many of whom are struggling under the rising cost of living and interest rates, while the top end of the market is now the best-performing sector in the market.
Ray White Mildura managing director Damian Portaro said it was “quite regular” now for Mildura mortgage holders to sell due to increasing repayment costs.
He said people were entering less expensive property markets or opting to rent because they wanted to improve their quality of life rather than be a “slave to these large mortgages”.
“We have clients that have mortgages that have gone up north of $400 per week, so that’s a struggle,” he said.
“They’re still making good money, but the mortgage might be high and the repayments are now hurting and affecting their life too much.”
Mr Portaro said the houses being sold tended to be in the $600,000 to $800,000 price bracket, which was a property market that was currently “hurting”.
He said he had never seen Mildura’s property market so “exceptionally disjointed”.
“Most markets tend to move from the ground up, meaning the lower end of the market might move first and then the mid-tier higher end and then the blue chip, that’s normally what would happen,” he said.
“But at the moment … the high end market, the blue chip $900,000 to $1 million plus, is moving very, very well, in fact, it’s the best market in Mildura now.
“And that $600,000 to $800,000 bracket, which is probably the higher mortgage bracket, that is something that is hurting a bit.”
Mr Portaro said the $400,000 to $600,000 market was currently at normal levels, but below that, the investor market, was “flopping” as a results of low demand due to “unattractive” government policy.
“I haven’t really seen a market in my career where the top end is the only one moving very well,” he said.
“I would suggest that (the) rate rise won’t affect the top end, but that $600,000 to $800,000 bracket, it could affect that, or it could delay the recovery further.”
Mr Portaro said there could also be more stress for renters on the horizon as signs suggest the priced they pay could also increase soon.
He said this was due to vacancy rates remaining “very, very low”.
“At the moment, it feels that rents have stabilised, but I suspect that might be short-lived because of the tightness and the vacancy rate that has been between 0.61 and 0.68 now for the whole year,” he said.
“I suspect, unfortunately, that there could be some pressure on them as well.”
Recent data from property analysis company CoreLogic showed that rental values in Mildura remained steady last month, only increasing by 0.3 per cent.
Property values also stayed relatively steady, falling only 0.9 per cent.
The value of units, however, fell 2.1 per cent.
The median house price in Mildura in October was $418,745 and the median unit price was $294,253.
According to Finder, the minimum household income required to afford the average Australian house is $182,000.
The average full time salary is $96,000.
