NSW regions where rate rises are pressuring homeowners to sell

Forced home sales are rising across Sydney and the rest of NSW due to soaring mortgage costs, but some city regions are seeing a larger impact than others.

More homeowners in parts of regional NSW are cashing out of their properties to cope with rising interest rates, but most Sydney owners are digging in with extreme steps to avoid selling.

And that lack of sales has starved the market of property listings at a time of rising demand, spurring an unexpected surge in home prices this year.

PropTrack analysis shows forced sales are inching up but a major bump in listings from struggling homeowners who bought at inflated sums over recent years has yet to eventuate in most of Sydney.

This was despite record levels of mortgage stress and many homeowners’ repayments doubling in a year due to the fastest interest rate hikes in three decades.

Experts said this was because homeowners facing unaffordable repayments were often scaling back on other expenses, refinancing and doing everything else possible to keep the family home.

Kate Smith said property owners are rarely selling the family home in the current market. Picture: John Appleyard

“There would be families who are really struggling and they will eventually reach the point where they have to sell, but that hasn’t happened yet,” said PropTrack analyst Angus Moore.

“It also doesn’t look like it will happen at any large scale soon given the unemployment rate is low and wages are growing.”

PropTrack’s research measured changes in the number of sales from homeowners who held their properties for less three years before reselling – often an indicator the owners may be struggling.

These types of sales increased in most areas this month, but the rises have tended to be minor so far.

The Sydney region with the biggest increase in short-turnaround sales was the Hills District, with growth of 3.4 per cent on the five-year average, followed by the outer southwest with a rise of 2.9 per cent.

Short turnaround sales increased by about 2-2.5 per cent in the northern beaches, Blacktown and eastern suburbs, while in the inner west, Ryde region and inner south the rise was less than 0.5 per cent.

Many regional areas had a much bigger jump in sales from owners who kept their properties for less than three years, rising to nearly one in five of total new listings in some areas.

Short turnaround sales in the New England and North West region had the biggest jump, rising 6.4 per cent above the five year average in June to over 20 per cent of all sales in that area.

In the Murray region there was a 5 per cent increase.

There was a similar trend in regional Queensland, with areas like Cairns and the Whitsundays seeing a nearly 10 per cent rise in short turnaround sales.

Mr Moore said the changes in some regional areas were large considering the number of these short ownership sales had been “very consistent” over many years.

He said job markets were not as strong in some of these areas, but local sales conditions were also relatively good, which meant owners were more confident about selling if they needed to.

“Unemployment is a much better predictor of mortgage defaults than repayments,” Mr Moore said.

“You can change many features of your loan if you’re struggling. There’s not a lot you can do when you no longer have money coming in … Most people still have their main source of income. That’s partly why we haven’t see such a big increase in (forced) sales.”

Ray White’s Kate Smith, a top agent in the eastern suburbs, said most of those selling up properties they only recently bought were investors.

“They’re sometimes more prepared to sell when their repayments are too high because they own other properties. They’re rarely selling the family home,” she said, adding owners were rarely flipping homes given soaring renovation costs.

Research group CoreLogic’s monthly measure of owners’ intent to sell, based on demand for online tools that assist agents in preparing properties for sale, showed it is likely to be a quiet spring for listings.

“Listing are rising, but they are still low,” said CoreLogic director of research Tim Lawless.