New Domain figures show distressed listings remain low and falling across Sydney overall, at 1.8 per cent for August, as home owners prioritise mortgage repayments over other spending. But the citywide figure masks sharp pockets of weakness. In the Hawkesbury region, 8 per cent of listings were considered urgent or distressed, followed by the Richmond/Windsor area at 6.8 per cent, Blacktown at 5 per cent and the Merrylands/Guildford area at 4.9 per cent.
Domain classifies listings as distressed when advertisements use language such as "price reduced" or "vendor must sell." In parts of western Sydney, investor buyers have dropped out of the market, home owners upgrading need to sell, and sellers frustrated by homes taking longer to sell are keen to secure deals.
In Melbourne, Melbourne City Council, Dandenong and parts of Stonnington and Casey topped the list for distressed listings, with more than 2 per cent of listings in these areas flagging a motivated, urgent or cut-price sale. Vendors in Melbourne City Council, which includes the CBD, Docklands, North, East and West Melbourne and Carlton, were the most likely to be seeking an urgent or motivated sale, at 2.4 per cent. Most Melbourne areas recorded a small decrease in their share of distressed properties over the past year, despite falling prices and three rate hikes during the reporting window.
Jalin Realty agent Ernest Towle said the Melbourne market had been falling, particularly units in the CBD and Docklands, for some time, driving sellers to consider their options.
This week the Reserve Bank increased the cash rate to 4.6 per cent, a 15-year high, and reports show property prices have now been falling for six months. AMP chief economist Shane Oliver said distressed listings had remained low overall because interest rates had not yet hit a threshold that would cause significant problems for home owners, but that could change.
"People have been able to get by with the rate hikes so far, but obviously the longer they stay up at these levels, or go up, the higher the risk," he said. "And I think we're getting closer to that tipping point now. I suspect as time goes by, distressed listings will start to go up."