Distressed listings up 11 per cent during RBA’s year of rate hikes

Thousands of homes are up for urgent sale, with distressed listings rising almost 11 per cent in the past year despite a shock pause in interest rate hikes by the Reserve Bank.

This three bedroom home at 92 Ryan Street, Lilyfield, NSW, is listed for mortgagee auction on April 15.

Thousands of homes are up for urgent sale, with distressed listings rising almost 11 per cent in the past year despite a shock pause in interest rate hikes by the Reserve Bank.

SQM Research’s Distressed Listings report out Tuesday found 6,220 homes across the country for sale in March, a 5.1 per cent monthly change and a 10.8 per cent rise on the same time last year.

SQM Research head Louis Christopher warned distressed listings numbers “may well trend up based on fixed term mortgage resets” – with an estimated 300,000 mortgages set to come off record low rate fixed terms this year alone.

“We are expecting a trend up, to what extent we don’t know”.

But, he said, “we are reasonably confident that if we were to see a pause in the cash rate now or in May, that it will not likely trend up to alarming levels, but we need to watch it.”

RBA Governor Philip Lowe confirmed Tuesday afternoon that “at its meeting today, the Board decided to leave the cash rate target unchanged at 3.6 per cent”.

MORE: Qld’s build-to-rent bid could solve rental crisis for good: Developer

Record delays: SEQ land lots now taking over half a year to settle

This townhouse at 3/34 Wilfred Road, Ivanhoe East, Victoria, has been put up by a mortgagee exercising power of sale. It has been set for auction at 10am on Saturday April 15.

A three bedroom Queenslander at 30 Robertson Street, Torbanlea, in Queensland is up for mortgagee sale via auction at 10am on Saturday April 22.

Queensland accounted for over a third of the distressed listings in March, with 2,266 properties for sale under such conditions, most of which were on the Gold and Sunshine Coasts.

But the biggest driver of the annual surge was double digit increases out of New South Wales (up 68 per cent to 1,265 homes) and Victoria (up 35.3 per cent to 893 homes).

“These trends indicate that the Australian real estate market is still grappling with the impact of economic uncertainty, with an increasing number of residential properties being sold under distressed conditions,” Mr Christopher said.

Of greatest concern though was a sudden monthly spike out of the smallest contributors to numbers – with the Australian Capital Territory logging a 58.3 per cent rise in March compared to February, the Northern Territory up 11.4 per cent and Tasmania jumping 10.7 per cent.

A four bedroom home at 633 Esplanade, Mornington, Victoria, is listed as a mortgagee sale with a $1.675m price guide.

Mr Christopher said while their numbers were very low compared to the larger states – ACT seeing 38 distressed listings, NT 98, and Tasmania 93 – all were now above their pre-Covid levels, which was “very concerning”.

In a normal property downturn, over 300,000 properties generally hit the market for sale, Mr Christopher said.

“In the scheme of things the overall number of listings in the marketplace is 249,000 homes, so as a percentage of total listings, (distressed listings are) still relatively small”.

But, he said “I think there are still many reluctant would be vendors out there who don’t want to sell in the downturn”.

A five-bedroom house at 81 Edward Street, Sylvania, NSW, is listed for mortgagee sale with a price guide of $1.6m.

Lot 1000 Carvers Way, Park Ridge, in Queensland, is listed as a mortgage sale via an Expressions of Interest closing April 27. The site covers 2.62ha of residential land in Brisbane’s south.

“What’s marked this downturn is the overall lacklustre listing activity that we’ve seen. We’re well down on longer term averages. We’re 50,000 short.”

The distressed listings data includes not just mortgagee sales, but encompasses divorce sales, deceased estates, urgent sales, desperate sellers, and around 50 other keywords.

“A strict mortgagee in possession is absolutely the worst case scenario. Banks do these days attempt to communicate to the borrower it’s time to sell before they get to that point. Hence, why we measure this.”

FOLLOW SOPHIE FOSTER ON TWITTER

Originally published as Distressed listings up 11 per cent during RBA’s year of rate hikes