Sydney suburb where no one defaults mortgage,
As some Sydneysiders struggle with mortgage repayments amid the cost-of-living crisis, Clovelly stands out as an exception.
In this suburb, every homeowner stays on top of their mortgage payments, despite broader economic challenges facing the city.
Clovelly is home to professionals like investment bankers, and it’s not uncommon for buyers to receive substantial deposit gifts.
With homes often priced at around $1.8 million, locals view spending on luxury items, like $70 floral arrangements, as reasonable.
However, despite its affluent reputation, Clovelly residents still feel the effects of rising living costs, which impact their daily lives.
Celia Crawford, owner of China Clay, a florist in the area, believes the cost-of-living crisis has hit her business harder than COVID-19.
She points out that there is a misconception that people in beachside suburbs with high incomes aren’t affected by rising costs.
Although Clovelly residents may have disposable income, the cost of living in the area remains undeniably expensive.
Her shop offers a $70 “Work from Home Posy,” which was created during the lockdown, and continues to sell well.
“We needed a more affordable option, as people don’t always want to spend a lot of money,” she explained.
“A small bunch of seasonal flowers was a simple, low-cost gift that could be ordered for oneself or others.”
Crawford mentioned that although her winter sales were quiet, she is preparing for the busiest time of the year.
“We don’t panic, because floristry is seasonal. We could have raised our prices, but people now have less disposable income.”
Clovelly stands out as the best-performing suburb in NSW for mortgage arrears, according to recent research from Moody’s Ratings.
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The report measured homeowners who were at least 30 days behind on their mortgage payments as of May.
Clovelly, however, showed no arrears, with all homeowners up-to-date, followed by Newington at 0.63% in arrears.
Belgravia ranked third with 0.64% of homeowners behind on their mortgages, demonstrating strong repayment rates in the area.
On the other hand, Casula recorded the highest arrears rate at 4.08%, making it Sydney’s worst-performing suburb for mortgage payments.
This was followed by Cabramatta and Punchbowl, which also had higher levels of mortgage delinquencies.
Moody’s Ratings analyst Letitia Wong explained that high incomes in areas like Clovelly lead to lower mortgage delinquency rates.
“The portion of a loan relative to their income is relatively low, giving residents a better financial buffer,” Wong stated.
NSW’s best-performing postcodes
| Locality | May-23 30-plus delinquency | May-24 30-plus delinquency | May-24 to May-23 change (% points) |
|---|---|---|---|
| Clovelly | 0.54% | 0.00% | −0.54% |
| Coniston | 0.67% | 0.48% | −0.19% |
| Newington | 1.62% | 0.63% | −0.99% |
| Belgravia | 3.23% | 0.64% | −2.59% |
| Caringbah | 1.80% | 0.64% | −1.16% |
| Eastwood | 0.81% | 0.73% | −0.08% |
| Cromer | 0.94% | 0.74% | −0.20% |
| Crows Nest | 0.56% | 0.75% | 0.19% |
| Booker Bay | 1.24% | 0.76% | −0.48% |
Wong mentioned that while interest rate cuts are expected next year, inflation remains high and continues to impact borrowers.
She anticipates that mortgage delinquency will rise in the next six months, but will eventually begin to decrease.
“Certain areas will be especially vulnerable, with limited capacity to handle higher repayments and the rising cost of living.”
When approached by The Sydney Morning Herald this week, Clovelly residents were reluctant to speak on the record.
Most residents claimed they were managing their finances well, with several stating they did not have a mortgage.
One resident admitted he had significant debt, but was unable to talk further as he was rushing to a business meeting.
White-collar jobs are helping Clovelly residents stay financially stable, with many managing to keep up with their expenses.
Several were busy on Zoom calls and working from home when The Sydney Morning Herald visited the suburb recently.
Many homes in the area were also undergoing renovations, and most residents trusted their neighbours enough to leave their front doors open.
This contrasts sharply with the residents of Casula in western Sydney, who are visibly struggling with mortgage stress.
When asked, many in Casula shared how they are taking on second jobs, dipping into their superannuation, and cutting out takeaways.
Last week, Westpac revealed that 47,500 of its customers nationwide had taken a hardship package this year.
However, another 24% of customers are actually ahead on their mortgage repayments by two years, showing a divide.
Demographer Simon Kuestenmacher described the situation as a “tale of two cities,” highlighting the stark contrast between suburbs.
“You can almost disregard the top end of the market, as they are generally unaffected by financial pressures,” Kuestenmacher explained.
“However, everyone feels the cost-of-living crisis in some way, unless you own your home outright and have significant savings.”
He added, “Whether your household income is $300,000 or $100,000, you’re still feeling the pressure in some form.”
“Some may need to drastically cut back on spending, while wealthier individuals may delay purchasing a new car or opt for a Bali holiday instead of California.”
He noted, “Your quality of life diminishes slightly, and you begin to feel deprived of those enjoyable experiences.”
Shaun Bettman from Eden Emerald Mortgages shared that Clovelly buyers range from investment bankers seeking $7 million homes to first-time buyers.
He explained that cash gifts are quite common in the eastern suburbs, typically ranging from $500,000 to $600,000.
“At the higher end, I’ve even seen a $1.8 million cash gift for a home deposit,” Bettman added.
Mortgage broker Shane Howley stated that most Clovelly buyers are owner-occupiers who are determined to remain in the area.
“They are locals who will do anything to stay put, which likely contributes to the low delinquency rates in Clovelly,” he said.
McGrath Coogee agent Mark Mcpherson noted that young families, returning expats, celebrities, and even gamers are among Clovelly’s buyers.
He mentioned that Jackie “O” Henderson purchased a home for $13.25 million last year, highlighting the suburb’s appeal.
Mcpherson also observed a shift in consumer behavior, saying, “Coffee shops aren’t as busy as they were four years ago.”
