Andre Lattouf bought his first home in the middle of last year but after facing eight interest rate rises he is already looking to sell. “It’s choking us,” the father of three says. “It’s frustrating and sad. We spent so much time renovating this place and putting so much into it, but my mortgage repayments have almost doubled and it’s becoming a joke.”
On Tuesday the Reserve Bank of Australia paused its interest rate hikes for only the second time this year, leaving the cash rate at 4.1% – the highest in 11 years.
It felt like a reprieve to some but came too late for Lattouf, who bought in the western Sydney suburb of Blacktown after renting for 14 years at nine homes.
Blacktown is one of the centres of the country’s mortgage stress and, with his plumbing business slowing down, Lattouf says he has “bitten the bullet” and accepted he just can’t keep up.
“If rates keep going up, it’s just not worth it for me. I have to think about my family.”
The effects of the steepest increase in interest rates in Australia’s history are being felt across the economy – and particularly in Sydney’s west.
Tony Tarabay has owned the manoush shop Zaatar Wou Zeit for close to two years but he says business has collapsed as people are cutting back on spending. Despite his eatery’s prime location within walking distance of the Blacktown train station, Tarabay is looking to sell.
“It’s sad, you know,” he says. “We all need to live and survive but right now I’m just worrying about everything. It’s been very bad, people are just not coming in. They don’t have money to spend on food any more. They’re worrying as well.”
Tarabay shakes his head as he speaks, explaining that repayments on his mortgage have doubled.
“I can’t keep up and with rent increasing I am now thinking about selling. But no one wants to buy a business that is currently disappointing. It feels like I’ve reached breaking point.”
The owner of the Blacktown barber shop Desi Touch is also feeling the pinch. Garry Gill says his business is suffering from a drop in the number of customers.
“People have cut back on everything. Some don’t even want their beards cut, they do it themselves. We used to get 20 to 30 people a day; now we barely get 10.”
Gill says the rent on his home and his business have gone up.
“We’re squeezed on every side,” he says.
Of the new listings in Blacktown in May, 9.2% were distressed sales, according to a report from Domain. That’s almost double the 5.2% rate a year earlier.
A real estate agent in the area, Riza Kamerakkas, tells Guardian Australia that 90% of his sales are due to mortgage stress, with many seeking to avert financial disaster.
“It’s not that they are under extreme financial stress now but that they are acting preventatively, before it’s too late,” he says. “They are selling because they feel they won’t be able to afford it in a couple of months.”
Kamerakkas, who owns the agency SkyProperty, says people selling come from all walks of life, from single mothers to retired investors.
“It’s not just impacting one demographic,” he says. “It’s affecting everyone. We have a mum that’s selling, we’ve got a professional, a corporate employee, we’ve got business owners.”
Kamerakkas says there has been a gradual increase in the rate of sales in the past six months, as interest rates have risen.
Asked whether it is a buyers’ market, Kamerakkas nods, saying buyer confidence is “nuts”.
“We’re just addicted to property,” he says. “We have a love for property in this country. People are maybe cutting down on other things, but they’re still purchasing, they’re still making that move.
“It could be that people are downsizing or upsizing but the rate of sales has remained pretty consistent.”
As for Lattouf, he hasn’t given up on his dream of home ownership but says he’s likely to move further west for a better price.
“They want to stop us spending but the housing market is still on fire. People here will never stop spending.”
