The graph that shows stressed property owners may be starting to crack
More property owners are looking to sell this winter, as soaring mortgage repayments stretch some households’ finances beyond what they can manage.
The unseasonal uptick in new listings numbers is modest so far and concentrated in investor-heavy inner cities and mortgage-belt outer suburbs, but more listings are expected in the coming months.
More homes have been listed for sale in recent weeks, defying the market’s usual winter slowdown.Credit: Eddie Jim.
Some of the effect may also be due to home owners who held off selling late last year, when the market was weaker, listing their homes as prices improve.
The number of new property listings in Sydney rose 7 per cent by the start of July, while Melbourne added 4.2 per cent, Brisbane added 9.4 per cent and Perth added 1.8 per cent, CoreLogic figures show. The data is a rolling count that compares new listings over the four weeks to July 2, with the four weeks to June 25.
The number of properties being listed for sale in all three cities has been rising since mid-May, and new listings in Sydney are 10 per cent above the five-year average for this time of year.
“It’s quite an unusual trend, particularly for Sydney,” CoreLogic Australia’s head of research Eliza Owen said, adding spring is considered the ideal time to showcase a home as gardens are in bloom.
“We had a very lacklustre spring selling season in 2022 and there was a lot of uncertainty around rate hikes and people not prepared to take on new mortgages, so this could be a little bit of catch up.”
However, some areas with an uptick in new listings were heavily mortgaged markets, suggesting some people may be getting ahead of mortgage serviceability issues. Other areas included inner-city Sydney and Melbourne, which have seen a particularly high proportion of investors selling up.
Sydney’s inner city had the largest jump in new listings, followed by mortgaged western suburbs around Parramatta, Auburn, Penrith and Blacktown.
Melbourne had a similar pattern, as listings rose in the inner city and in mortgaged suburbs of Melton/Bacchus Marsh, Monash and Whittlesea/Wallan.
Brisbane’s biggest jumps were in the inner east, Sherwood/Indooroopilly, North Lakes, Capalaba and Chermside.
Separate CoreLogic figures recently showed a growing number of property owners were reselling within two years, with one in 12 properties that traded last quarter held for 24 months or less.
Investors and high-density markets were particularly hard hit, with investor resales (12.6 per cent) three times more likely to be at a loss than owner-occupier (4 per cent) sales.
Owen said mortgage stress would take time to show up in official data, but the uptick in listings and short-term holds could reflect buyers trying to get ahead of any risk of a mortgagee-in-possession sale.
“People would be able to see on the horizon whether they can afford the home they are in, and they might be making a decision now to get ahead of being in that situation,” she said.
BresicWhitney chief executive Thomas McGlynn said his agency listed three times as many properties this June than last, and is on track to sell double the number of properties this July, compared to last.
He has noticed more Mum and Dad investors deciding to sell as they feel the pressure of rising costs.
“Not only have their mortgage payments gone up, but utilities have gone up and even in many cases strata fees have gone up,” he said.
“It’s better to get ahead of any potential pressure you might be experiencing at the back end of the year and consider your options now.”
Real Estate Institute of Australia president Hayden Groves agreed some recent first home buyers and investors were making tough decisions to sell, but expects the increase to be gradual.
“We have seen a lot of people, particularly young people, take up their first homes during the COVID stimulus period,” he said.
“A lot of them are coming off [low fixed-mortgages] now, and it’s really starting to bite … we do expect that more stock will come to market as a result of interest rate pain.”
He expects the banks, which are making significant profits off mortgages, to be lenient about delinquencies, and foreclose on mortgagors as a last resort.
SQM Research founder Louis Christopher felt it was too early to read a trend into the listings uptick, but will be watching to see if it continues.
His research shows listings in Sydney lifted 9.4 per cent from May to June, but only 0.8 per cent in Melbourne.
“There’s definitely a risk it’s coming,” he said. “We’re in the middle of the fixed rate mortgage reset and that takes a bit of time to come into the market.
“You can have a property owner who has just had a reset, they’re struggling to meet the mortgage repayments but that might take some time to fully comprehend that.”