Parts of the city’s investment environment are being tipped as not too hot, not too cold

Victorian mortgagors are the most reliable of any Australian state, according to data released in August by Fitch Ratings.

The rating agency’s Australian Mortgage Delinquency by Postcode report showed over the six months from September 2011 to March 2012, Victoria had the lowest state rate of mortgages in arrears, with 1.28%.

This was up from 1.04% in September, but well below the national average of 1.6%. The two territories were the only areas to perform better, with the ACT registering 0.69% and the Northern Territory rising to 1.05% from 0.75%. The worst performers were Queensland (1.86%, up from 1.7%) and NSW (1.73%, up from 1.56%).

“Victoria’s strengths include a stable and diversified economy, a stable property market, satisfactory affordability and low unemployment rates,” the agency’s mortgage report stated. “There is no reason to expect a drastic change in delinquency rates in Victoria in the near term. The stabilisation of property prices does not currently represent a threat to mortgage performance.”

The report showed the state’s mortgage performance did not change significantly, but was affected by an increase in delinquency rates in the South-East Outer Melbourne region, which reported a rate of 1.78%, up from 1.38% in September.

On the positive side, Victoria had five of the nation’s 10 best performing regions by value: Boroondara City, Northern Middle Melbourne, Eastern Outer Melbourne, Inner Melbourne and Southern Melbourne. These areas had rates of less than 1%, with Boroondara the best at 0.67%.

Jobless rate improves

Victoria has set about reversing an upward trend in unemployment, falling from 5.5% to 5.4% in July, according to figures from the Australian Bureau of Statistics. The slight improvement came after the rate moved closer to 6% earlier in the year. Victoria is now tracking closer to the national headline rate of 5.2%, but a softer market may be on the horizon for everyone, according to Janu Chan, economist at Bank of Melbourne.

“These are Goldilocks job numbers, not too hot, not too cold,” Chan said, adding that a soft global outlook and the high Australian dollar may continue to cause headaches for the labour market.

Investors targeted in affordable housing proposal

The Real Estate Institute of Victoria (REIV) has criticised a new proposal aimed at increasing housing affordability in Australia.

The four-point plan, released by Australians for Affordable Housing (AAH), suggests reducing tax breaks for investors, such as negative gearing and capital gains tax discounts; and the abolishing of stamp duty in favour of a broad-based land tax. The proposal argues current investor concessions encourage speculative investment in high cost housing, at the expense of affordable housing; pushing first homebuyers out of the market.

The plan will not solve Victoria’s affordable housing issues, according to REIV policy and public affairs manager Robert Larocca, who says there is a great expectation on investors to provide rental stock. “The suggestion to abolish or curtail negative gearing ignores the increasing expectation that is placed on the private sector to provide rental homes,” Larocca says.

“Governments need to make it easier, not harder, for individuals to invest in housing. This requires more equitable taxation arrangements and making it easier for the supply of new homes to be increased when necessary.” Larocca says charging investors more tax will likely result in higher rents, as is the case with current stamp duty, making rental properties less affordable.

Carlton cheaper to buy than rent

The inner-northern Melbourne suburb of Carlton has come in fourth on an RP Data list of Australian suburbs where it is cheaper to buy properties than to rent.

The Buy vs. Rent report found 238 suburbs nationwide fit the criteria and, while only 10 Victorian markets made the list, Carlton units performed well. With a median value of $260,111 and a weekly asking rent of $400, Carlton owners could be better off than their tenants by an average of $307 per month.

Dallas ($63 saving) was the other Melbourne metropolitan entry on the list, while eight regional markets were named: Dimboola ($83), California Gully ($72), Red Cliffs ($53), Merbein ($53), Warracknabeal ($50), Irymple ($38), Corio ($25) and Long Gully ($5).