‘A really difficult decision’: How home owners are beating mortgage stress

The first time Courtney Adamo saw the shack that would become her beach house, it was a sunny day and there were whales in the bay below.

“It felt really magical,” the parenting entrepreneur and author said. “We thought it would be a beautiful place to have a holiday home for our family.”

But after six years, a knockdown-rebuild and a string of interest rate rises, Adamo and her husband, Michael, have made the hard decision to sell their second home.

They’re not alone. The cash rate last week reached an 18-year high, and real estate agents and mortgage brokers report that home owners have been reducing debt by selling secondary residences such as holiday homes or investment properties.

“With the rising interest rates it’s been very difficult to pay two mortgages,” said Adamo, 45, a mother of five. “Two of our children are in university overseas, which is expensive, and we’re just feeling the financial pressure of the choices we’ve made and we have to let go of something. And unfortunately that’s that house. It was a really difficult decision; I feel really tender about it.”

The Adamo family demolished the old asbestos shack on the site at Minnie Water, near Coffs Harbour on the NSW North Coast, and built an architecturally designed four-bedroom home with natural materials such as hempcrete and Blackbutt timber and a stylish custom-designed kitchen.

They have enjoyed family holidays in the small town, surfing, swimming and playing games and cards.

“We just fell in love with the spot,” said Adamo, who lives in the Byron Bay hinterland town of Bangalow. “Minnie Water’s really special. It’s got beautiful national park and beautiful beaches and it’s very quiet.”

Her selling agent, Sam Hinton of Lifestyle Coffs Harbour, has seen some owners who have a primary residence and an investment property decide to sell their secondary property.

“I would imagine the interest rates would certainly play a role in this. The gap is becoming wider in terms of being able to sustain those mortgage repayments,” she said.

On the other hand, she is fielding demand from city residents selling up and buying on the more affordable Coffs Coast.

“Still in these coastal pockets in NSW, I think there’s some really great value properties as opposed to what you would pay for the same property in some capital cities.”

Chief executive of mortgage brokerage Shore Financial Theo Chambers has noticed home owners focusing on cashflow as interest rates rise.

Some owners who bought a holiday home or second home, especially during the peak work-from-home era, are starting to reconsider if they want two properties, he said.

“That’s one way of people paying down the debt, is offloading those second homes,” he said.

He also highlights young professionals who bought an apartment as their first home, then when they were ready to upsize, turned their first home into an investment property.

“Now they’ve come to terms with letting that go and paying down debt, even if that means forgoing a tax entitlement,” he said.

In Byron Bay, Pacifico Property principal Christian Sergiacomi said a few vendors have sold their beach homes this year as interest rates rose and they found they could not rent it out as much.

“Say they bought it for $5 million, they’d be happy to sell it for $4.5 million, $4.6 million just to move it on.”

He thought there were other issues affecting the Byron Bay market, such as council limits on the number of nights a home can be leased for short-term stays, and the federal government’s changes to the tax treatment of investment properties.

But he sees consistent demand from young families selling homes elsewhere and buying in the Byron area for a lifestyle change, as well as downsizers.

“[Byron is] still paradise. Still the greatest place on the planet,” he said.

On Victoria’s Mornington Peninsula, Kay and Burton Portsea director Liz Jensen said owners have been trying to keep their secondary properties rather than selling at a discount – so far. But some were “edging” on needing to decide whether to sell.

“It’s edging on that. It’s ‘if we don’t sell now, is it going to get worse?’” she said.

She thought she would have been asked to do more appraisals this spring.

”People tend to ride it out … Rather than face selling their property for less than they think it’s worth or the bank thinks it’s worth, they’re riding out the storm and living a bit leaner.”

As for Adamo, she hopes a family who loves the area buys her Minnie Water residence, price guide $3 million to $3.2 million.

“Lots of people here in Byron, when we tell them about Minnie Water, haven’t heard of Minnie Water. So I think it could be someone who doesn’t even know the area but could fall in love like we did with the area and hopefully love it like we have.”

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