The Sydney and Melbourne suburbs most at risk of mortgage default revealed

Inner-city suburbs in Sydney and Melbourne are among those National Australia Bank has included in a list of 80 “restricted postcodes” at greater risk of mortgage default.

Sydney postcodes including Glebe, Chatswood and Chippendale and Melbourne locations including Abbotsford, the central business district and St Kilda Road are among those the bank has assessed as “exhibiting characteristics which may indicate future deterioration in credit risk”, according to Fairfax.

The list of 80 suburbs also includes around 40 locations in areas once dominated by mining activity, which the bank considers to be at “significant deterioration in credit risk”.

Prospective property owners in those areas would need to stump up a 30% deposit to secure a loan from NAB, while those wishing to buy in the 34 Sydney postcodes and five Melbourne postcodes, would need to have a 20% deposit.

In a statement provided to SmartCompany, a spokesperson for NAB said the bank “continually review[s] our risk settings to ensure we’re lending responsibly and sustainably”.

“This is a very normal practice for any bank,” the spokesperson said.

“We recognise that in any property market, no two suburbs are the same and these strategies take into account a range of economic factors and provide an extra level of caution to our risk settings.”

Shane Garrett, senior economist at the Housing Industry Association, told SmartCompany this morning it is certainly not unusual for major banks to develop means of limited exposure to credit risk as there is “a limited supply of funds to lend”.

“The NAB document that has come out is their way of managing that risk by identifying suburbs, including mining suburbs where activity is falling already,” he says.

However, Garrett says this is the first instance the wider Australian housing market has seen evidence of some of the credit restrictions that are filtering through to the owner/occupier segment of the market from increased market scrutiny from the Australian Prudential Regulation Authority.

“Ultimately it comes back to the credit restrictions, which have been coming in over the past 12 months,” he says.

Garrett says it is highly likely each of the other major lenders in Australia has a similar list of locations but these documents “might not come into public life”.

According to Garrett, the credit restrictions will have flow-on effects to the supply of housing in Australia and to the SMEs that operate in the building and construction markets.

“Australia does have a housing shortage,” he says.

“When we see these credit restraints, it is unwelcome from the point of view of the housing shortage.”

“It means fewer new homes will be built … and that is unwelcome in terms of creating a more affordable housing sector across the country.”

The Sydney and Melbourne suburbs most at risk at mortgage default according to NAB are:

Sydney

2000 Sydney CBD

2205 Arncliffe, Turrella, Wolli Creek

2113 East Ryde, Macquarie Park, North Ryde

2769 The Ponds

2209 Beverly Hills, Narwee

2019 Banksmeadow, Botany

2199 Yagoona

2017 Waterloo, Zatland

2067 Chatswood, Chatswood West

2211 Padstow, Padstow Heights

2008 Chippendale, Darlington

2141 Berala, Lidcombe, Rockwood

2153 Baulkham Hills, Bella Vista, Winston Hills

2210 Lugarno, Peakhurst Heights, Riverwood

2118 Carlingford

2222 Penshurst

2166 Cabramatta, Cabramatta West, Canley Vale/Heights, Lansvale

2767 Bungarribee, Doonside, Woodcroft

2127 Newington, Sydney Olympic Park, Wentworth Point

2144 Auburn

2566 Varroville, Bow Bowing, Minto, Raby, St Andrews

2140 Homebush, Homebush West

2194 Campsie

2037 Forest Lodge, Glebe

2768 Glenwood, Parklea, Stanhope Gardens

2142 Camellia Clyde, Granville, Holroyd, Rosehill, South Granville

2150 Harris Park, Parramatta

2220 Hurstville, Hurstville Grove

2168 Ashcroft, Busby, Cartwright, Green Valley

2151 North Rocks, North Parramatta

2146 Toongabbie, Old Toongabbie

2195 Lakemba, Wiley Park

2112 Denistone East, Putney, Ryde

2208 Kingsgrove

Melbourne

3000 Melbourne CBD

3004 St Kilda Road Central

3006 South Bank, South Wharf

3008 Docklands

3067 Abbotsford