Data recently released regarding the new housing sector has shown that home owners are falling behind on their mortgage repayments in increasing numbers.
The Queensland floods, Christmas spending and the November 2010 interest rate rise have impacted on borrowers' serviceability.
Data just released by the Australian Property Monitors has however shown that auction clearances in the eastern state capitals are at their best levels over the past four years.
In a new report by BIS Shrapnel it has been revealed that new housing starts are set to drop 9% in New South Wales and 5% in Victoria over the next financial year.
In the report written by Jason Anderson he stated that the skills shortage would explain the difference in the activity between the new and established housing sectors, and that in Sydney new commencements were close to a 50 year low, but that average building prices were not really declining.
In previous cycles construction prices dropped around 5% but that has not happened in Melbourne or Sydney and it is preventing a quick recovery.
In a new report released by Standard & Poor's it has shown that high interest rates are having an impact on existing home owners as prime mortgage arrears are at their highest level in 10 years. The report has also revealed that arrears on low-doc loans were at 2.33% while full-doc home loans arrears were at 1.1%.
Housing industry Association chief economist Harley Dale has stated that a tight rental market, high interest rates and an indebted market showed that affordability is low and that a record number of households are in a stressful situation.
Mr. Dale also mentioned that while mortgage arrears levels were on the increase, Australia's default rate was around 2% still well below the double digit levels experienced in the U.S.