THE downturn in Western Australia's property sector has produced an increase in property repossessions and home loan arrears in the state, according to a report from the Reserve Bank of Australia.
THE downturn in Western Australia's property sector has produced an increase in property repossessions and home loan arrears in the state, according to a report from the Reserve Bank of Australia.
Data sourced from state courts showing the number of applications by lenders for property repossessions has revealed a sharp increase in repossessions in WA.
In the three months to the end of June, 221 civil property possession applications were lodged with the WA Supreme Court - the highest level since at least 2000-01.
It was also a significant rise on the 164 applications lodged in the first quarter of 2008, and almost double the level recorded for the June quarter 2007.
In total, 686 applications were recorded in WA last financial year, up more than 50 per cent from the year before.
The RBA said the increase in WA repossessions was consistent with rising home loan arrears, mainly in the non-bank lending market.
In July, 0.35 per cent of prime housing loans securitised by all lenders in WA were in arrears by 90 days or more. It was the eighth consecutive increase in WA loan arrears since November last year, when the rate was 0.12 per cent of loans.
By contrast, repossession applications in New South Wales, Victoria and south-east Queensland have stabilised.
Nationally, the proportion of bank loans in arrears by 90 days or more was 0.41 per cent at the end of June, unchanged from the same time last year.
However, the RBA said about 17,000 borrowers were at least 90 days behind on their mortgage repayments, which was up 2,000 over the past six months.
The RBA report also said most indicators suggested business finances were in good shape, although highly geared firms and those exposed to declining asset valuations were coming under pressure.
In particular, listed property trusts and infrastructure companies had suffered, with the LPT sector's average share price down by 38 per cent since June last year.
The RBA said this was driven by a range of factors, including the sustainability of higher gearing, higher debt-servicing requirements on investor distributions and the prospect of downward asset revaluations.
Property-related firms had also reported difficulties in obtaining funds, the report said.
In the year to March 2008, bank lending for commercial property rose by 28 per cent, while lending for office property grew by 38 per cent.
The report said the broader business sector was also registering concern over the availability of debt financing and tighter financial conditions.
Interest rates on large and small business variable-rate loans have increased by around 140 basis points, with the aggregate interest-servicing ratio for large businesses at its highest level since the early 1990s.
