Which suburbs will be worst hit by the financial crisis?

Anywhere I describe as 'the land beyond the trams' where you have to drive to live.

EVERYWHERE .................................................................................................................................

I think it's pretty obvious that the hardest hit suburbs will be the lower class ones, with the highest geared homes. Northern and Western suburbs will probably be hit the hardest. BUT as DArgy suggests every household in Vic (and Australia for that matter) will sufer AND suffer more and more over the next 12-24 months. We havent seen the hardest of this economic crisis by a long shot.

One interesting thing to note is how many luxury cars are now on the car classified sites. Luxury items are the first to go in times of financial crisis, so perhaps the wealthier suburbs are being hit quite hard as well. One theory is that wealthy people have high proportions of stock, and higher gearing. As the stock market crashed, the margin calls come flying in from the bank, and the first thing to go is of course the nice car. Food for thought!

AJ

How has your suburb been affected by the financial crisis? Has your home value changed?

Melbourne house prices across the city have increased in value, driven by pent up demand, first home owner grants and lack of supply. NSW and QLD have been hardest hit by the GFC, primarily QLD.

Tid bit of info? Port Melbourne has the highest $value of mortgage arrears in Melbourne....

I think as you pay more for properties in more expensive areas you would have greater mortgages. As interest rates increase more people with expensive properties would be defaulting you would think. These people would have to move to a more affordable property and generally that is out further from the city. With the standard of living becoming more expensive, wages not increasing and job losses it has become harder to maintain those expensive properties. I believe these expensive areas would suffer the biggest effects of the financial crisis. The more affordable properties have actually increased in value during these hard times and more expensive areas have lost value. As there is greater demand in the cheaper end and you also have the entry level competing for those affordable homes you will have good growth. I believe if it wasn’t for foreign investment the higher end would get flogged. As we are coming out of this global recession all properties are in very good shape however the interest rates are heading in one direction, so do the sums.

Interesting to raise this topic again now that the dust has settled AND considering house prices are on the rise again. Are there any suburbs that haven't recovered?

AJ, Be patient, you cannot be serious and tell everyone the dust has settled, it has just begun. With our government opening the doors to uncontrolled foreign ownership which has kept our housing very much inflated this will not and could not be sustained. There are still many more international financial issues at play that are being unravelled which is still keeping our housing market very volatile. When will our housing market reflect the true markets indicators is anyone’s guess. Did you predict the world financial crisis? If so you wouldn’t be speculating on this site would you? I am a property investor and have no reason to exit the market and try back into shares. Property investing for me is a long term strategy and has been working well for me. There will be a slump but when and for how long is anyone’s guess. If you are in it for the long term I believe you will still be in front. Raise this topic in another 12 months and there will be other issues affecting the property markets.

Hey yogi,

Well compared to 12 months ago, the dust has most definitely settled. Sure it depends on your 'definition' of the term, but IMHO things ARE better. Not that they have are not stable by any means, especially with what happening throughout some of the european nations at the moment HOWEVER I think people would say that things are better. One thing to note is that I completely understand that things are still quite volatile, many predicting that a real estate bubble, especially here in Melbourne, is going to burst.

SO back on topic, many suburbs are performing extremely well, and are back to very respectable levels. I suppose my thoughts still stand...are they any suburbs that really have not 'bounced back' at all?


AJ