In Australia, everything appears to be on the rise: interest rates, the prices of goods and services, property values, and even the temperature.
On the other hand, an surprisingly to some, the number of people selling their homes due to mortgage affordability issues is decreasing.
In fact, new Domain figures show a clear decrease in distressed listings across the capital cities, despite forecasts of the great “fixed rate mortgage cliff” – where thousands of homeowners were expected to fall into distress financially and be forced to sell due to higher interest rates.
Source: Domain
Contrary to all those predictions from the property pessimists, distress sales haven't increased.
Actually, it's quite the contrary.
Dr Nicola Powell, Domain's Chief of Research and Economics said:
“That line graph says it beautifully — we’ve got those areas of prices rising, and as the market has recovered, the portion of distress listings reduced.
They all point in the same direction in terms of positivity in our housing market."
The low level of distressed listings is not surprising
Stephen Halmarick, Chief Economist and Head of Global Economic and Markets Research at Commonwealth Bank of Australia told Domain that the low level of distressed listings is not at all surprising.
He further commented:
"The last thing people stop paying is their mortgage.
They reduce spending on lots of other things first.
The unemployment rate is still very very low, and that helps a lot.
There’s a lot of outreach going on from banks.”
For example, in Sydney, only 3.3 per cent of listings were from distressed sellers, compared to 4.7 per cent this time last year.
Meanwhile, in Melbourne, it was down 0.4 percentage points from 2.0 per cent in August 2022.
Hobart and Darwin were also down 0.4 points from 1.1 per cent and 5 per cent, respectively, while Perth experienced a 1.3-point decrease from 3.7 per cent.
The sharpest decline came from Brisbane, with a 2.4-point decrease from 6.6 per cent.
Dr Powell explained:
“The capital cities’ level of distress listings remain very contained. And they shrunk across many of our cities every single month this year.
Overall, it showcases that homeowners are adjusting to financial circumstances to meet mortgage repayments.
The other thing is our housing market is in recovery, so when somebody does need to sell, the likelihood of them actually selling for less than what they purchased is actually diminishing over time."
8 of the top 10 regions leading the distressed listing shrinkage in the country are in Queensland.
| SA3 | State | Aug-23 | Aug-22 | Annual Change (percentage points) |
| Wynnum – Manly | QLD | 7.1% | 16.5% | -9.4 |
| Coolangatta | QLD | 3.6% | 11.1% | -7.5 |
| Pennant Hills – Epping | NSW | 3.3% | 8.9% | -5.6 |
| Mt Gravatt | QLD | 10.2% | 15.6% | -5.4 |
| Surfers Paradise | QLD | 8.6% | 13.6% | -5.0 |
| Capalaba | QLD | 5.3% | 10.3% | -5.0 |
| The Hills District | QLD | 2.2% | 7.2% | -5.0 |
| Brisbane Inner–East | QLD | 3.2% | 8.1% | -4.9 |
| Holland Park – Yeronga | QLD | 3.6% | 8.3% | -4.7 |
| Fairfield | NSW | 7.3% | 12.0% | -4.7 |
Source: Domain data
Based on Domain's numbers, in Brisbane’s eastern region of Wynnum-Manly, the data found only 7.1 per cent of listings in August were from distressed sellers.
That figure was 16.5 per cent last year.
Domain noted that the decrease in distressed sales could be related to the generally low number of listings in the market.
Powell said that even though the market is improving and distressed listings are low, pockets of weakness will always exist and are more likely to be in mortgage belts – areas where it’s more affordable and tends to attract first-time buyers.
