Home listings pick up as mortgage delinquencies rise

More homes are coming to market at the same time as borrowers face more stress from higher interest rates.

Activity in the residential property market picked up ahead of the autumn selling season but remains quieter than at the same time last year, and mortgage delinquencies are on the rise.

Housing researcher PropTrack said that choice for buyers has improved compared to a year ago, with total listings up 9.6 per cent year-on-year, although buyers must now battle higher interest rates.

February saw the traditional pick up in stock ahead of the autumn selling season. New listings nationally on realestate.com.au increased 24.8 per cent month-on-month. Even so, it was a slower start to the year than was the case in 2022, with new listings down 11.1 per cent year-on-year in February after a similarly slower January.

PropTrack economist Angus Moore said that activity across the nation’s property markets had picked up as vendors geared up for the autumn selling season, pointing to activity in big cities.

“The number of new listings in capital cities jumped 26.6 per cent month-on-month. Even so, property markets have had a slower start to the year, with the number of new listings in the capitals down 13.2 per cent in February compared to the same time last year,” he said.

Mr Moore said that the limited new stock coming to market in recent months “appears to be putting a floor under prices”.

“After consistent price falls throughout most of 2022, home prices experienced a slight increase in February, up 0.2 per cent month-on-month. Almost all capital cities recorded small increases,” he added.

Mr Moore said that the full effect of the Reserve Bank’s rapid hike in interest rates was yet to be felt, with prices expected to fall further this year.

“While selling conditions have softened from where they were a year ago, and market activity has slowed, the fundamental long-term drivers of demand for housing remain solid,” he said.

Unemployment remained close to multi-decade lows for much of last year and into early 2023, with Mr Moore saying that wages growth had also started to pick up and international migration had resumed, supporting housing demand.

Nearly all capital cities had a rise in the total number of properties listed for sale on a year ago, with only Perth recording a decline. In both Sydney and Melbourne, the total number of properties listed for sale in February was around the average over the past decade.

While selling conditions have softened from where they were a year ago, and market activity has slowed, the fundamental long-term drivers of demand for housing remain solid. Unemployment has remained close to multi-decade lows for much of 2022 and into early 2023.

A report by credit ratings agency Moody’s found that mortgage delinquencies will continue to rise moderately amid high rates and inflation.

Australian residential mortgage delinquency rates, which increased slightly over the fourth quarter of 2022, are expected to continue rising over 2023 as higher rates and high inflation erode borrowers’ capacities to repay debt.

“However, delinquencies will only rise moderately, because low unemployment and prudent lending standards will mitigate risks,” Moody’s said.