Mortgage stress remains elevated in Cairns

Soft property market conditions and a growing part-time employment trend are contributing to high levels of mortgage stress in Cairns households.

According to Digital Finance Analytics (DFA), the Cairns region now has the fifth highest rate of mortgage stress in Queensland.

Rick Carr, research director at Herron Todd White, said he wasn’t surprised by the city’s prominence on the DFA’s list, citing flat conditions in the local property market as just one influencing factor.

“In a sense, if property ­prices are going up and people get into financial trouble, it might be easier for them to get out,” Carr said. “[However] in a market like Cairns it’s very hard to just sell your home and move on. If you ­suddenly lose your job, you can’t pay off your mortgage.

“In a flat property market you’re often more susceptible if your circumstances change … it’s difficult to relocate somewhere that has better employment prospects if you can’t sell your home,” he added.

The DFA defines mortgage stress as “not having enough income to cover home loan repayments and living expenses.”

While Cairns’ unemployment rate has been improving, there has been a gradual shift to more part-time employment, which skews things somewhat.
“Although employment is doing quite well, it is not generating the same level of income for mortgage holders as it used to,” Carr said. “Power prices are also having an impact, and then add ­insurance costs, which are still high in North Queensland.”
The DFA’s research indicates that 146,500 households across Queensland are now under mortgage stress. Despite these grim statistics, Carr expects the level of mortgage stress in Cairns to subside.
“Cairns is still susceptible to high levels of mortgage stress as a hangover effect of the economic slowdown the ­region experienced,” he said.