Contracts ‘crash’ as banks clamp down on lending in QLD
Queensland’s property market might be stronger than southern states, but there is a new sign the market is cooling.
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Queensland’s property market might still be firing, but there is another sign that the market is cooling – the number of properties being relisted for sale after a contract has fallen over.
On property portal realestate.com.au there are more than 60 properties listed as ‘contract crashed’ across Queensland, with others listed as ‘contract collapsed’ or ‘contract cancelled’.
It is something that was rarely seen during the peak of the boom, but is one that experts tip will become more common as banks clamp down on lending, bank valuations challenge offers, and buyers, many of whom were signing multiple contracts, use cooling off periods to pull out of a sale.
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Ray White’s chief economist Nerida Conisbee said there was little doubt that tighter lending restrictions were now having an impact.
But she added that ‘buyer remorse’ might also be a factor, with early signs that price rises were slowing prompting some to change tact.
“I expect we will see more of it, especially if interest rates rise,” Ms Conisbee said.
“The market is shifting, and while not everywhere is falling like Sydney and Melbourne, it is showing signs of cooling.
“It has shifted down a gear, and a lot of lenders are lifting fixed rates out of cycle (with the RBA) anyway, so while you might have been able to borrow $1 million six months ago, that might not apply now.”
And those failed contracts range from family-budget friendly homes in the state’s north, to luxe townhouses and glam coastal residences in the red-hot southeast corner.
Just recently, the contract on a waterfront house on the Gold Coast “crashed”, with the property now relisted for sale.
The agent marketing the property, who did not want to be named, said the buyer had been given ample time to settle the contract but “money from overseas” never arrived.
In Brisbane, Ray White Aspley Group agent Aaron Wheeler, who has relisted a property after its contract fell over, said the issue was complex, with desperate buyers often signing multiple contracts and then using cooling off periods to back out.
“You get ridiculous excuses around it,” he said. “From street position, to something else wrong, but you just know they have found another property.
“It has been tough for buyers, but it is not fair on sellers either.
“You think you are done and dusted and then they just don’t take your call.”
On the bayside, First National agent Brad McDonald recently sold a 4-bedroom house after the first contract fell after a valuation came in under the offer price.
“It went under contract at $1,220,000 pending building, pest and finance, with a 30-day settlement,” he said.
“The valuation by the bank came in at $1.1 million and the contract was canned, but I was able to keep it together, with a new contract for $1.124 million.”
Mr McDonald said the bank crackdown had become more noticeable in recent weeks, with a contract on a block of land also knocked back after a valuation of $550,000, as opposed to the $600,000 offer.
“We know that rates are going to go up but, in my opinion, there is still room for growth in Brisbane, but I do think it is plateauing,” he said. “The heat, the FOMO has come off.”
There are a dozen properties back on the market in the Brisbane region after the “contract crashed”, but those are likely just the tip of the iceberg.
On the Sunshine Coast, arguably Australia’s hottest market, there are six properties back on the market after contracts fell over, and they range from vacant land and acreage properties to townhouses and family homes.
Local Property Group agent Ash Roberts recently re-sold a modern new-build at Yandina after the first contract crashed.
“We have noticed that things have really started to tighten up,” he said. “What was doable last year, just isn’t as doable now and things have started to slow.”
But he said that stock was still moving, however added that the days of vendors chasing “silly prices” were likely over.
Up north, there are two properties in the Cairns region that are back on the market after the ‘contract crashed’, with one of those under offer again.
In Townsville, there are currently four listings where the ‘contract crashed’, with at least two of those ‘due to finance’.
Another four are listed in the Mackay region.
According to Finder’s Consumer Sentiment Tracker, the percentage of Australians who now struggle to pay their rent or mortgage has increased to 37 per cent, up from 28 per cent in March 2021.
Finder home loans editor Richard Whitten said property sales could look like a done deal, but then fall over after the contract is signed.
“This is often because the buyer was unable to get a home loan approved,” he said.
“Property contracts can be ‘subject to finance’ which allows buyers to walk away if they can’t get a loan approved.”
But even he admitted that the use of the words “contract crashed” were not something he had seen often.
“It definitely looks like a very motivated seller,” he said.
“Real estate agents don’t normally try to signal that their client is desperate to sell.
“But it’s really important to keep in mind that contracts can fall through for all sorts of reasons, and it’s not always from the buyer’s side either.”
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