A search on realestate.com.au shows buyers are seeking distressed sales in hopes of getting a bargain. But they might be out of luck.
Search data shows that buyers are becoming increasingly opportunistic, trying to pick up defective listings that someone else is ready to take down, hoping to get a discount if possible.
But experts say this says more about the number of buyers looking for a bargain than the actual number of struggling sellers.
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The number of real estate searches using the keyword “mortgage” has skyrocketed over the past year.Photo: Getty
In the year to October, real estate searches using the keyword 'mortgage' on realestate.com.au increased by 229% year on year, making it the 12th most popular search term.
This increase was particularly pronounced in Victoria and New South Wales, which recorded a staggering 444% and 376% increase respectively.
Meanwhile, searches for 'mortgage' increased by 164% in Queensland, 162% in South Australia, 120% in the Commonwealth of Australia, 90% in Western Australia, 72% in Tasmania and 53% in the Northern Territory. did.
low level of sales slump
Vendors are usually not keen to advertise that sales are difficult or delayed. We believe this can negatively impact your chances of securing the best price.
However, data shows that the number of lenders taking over properties as a result of mortgage arrears is in any case minimal. According to Fitch Ratings, the 30+ day mortgage delinquency rate rose only to 1.12% in the September quarter.
“This is actually quite low,” said Angus Moore, an economist at PropTrack. “Delinquency rates have increased slightly over the past six months or so, but are still lower than they were before the pandemic.”
But he cautioned that these rates are likely to rise as the financial burden takes time to materialize in data.
“It’s clear that people are stressed before they default on their mortgage or put their home on the market.
“But given what's happening with interest rates and the difficulty in paying off mortgages, delinquency rates will probably go up.”
Buyers, especially investors, are looking for bargains.
However, although the level of sales of defective products is low, buyers are looking for bargains wherever they can find them.
“Right now, affordability is a big driver of buyer demand,” said Matthew Tiller, head of research at L.J. Hooker.
“More affordable homes, units and renovation jobs are popular in both metropolitan and regional markets.
“And given that the rental market is so tight, a lot of people are looking at lower price points as they look to make the transition from tenants to homeowners.”
Buyers are looking for bargains on realestate.com.au as affordability worsens, while others are looking for opportunities for those who can't afford repayments.Photo: Getty
Ray White group CEO Avi Khan said the increase in searches for mortgage sales was likely due to investors.
“I think the number of people looking for distressed sales is directly related to the increase in the number of investors in the market. “We recognize that there may be more people wanting to sell before Christmas.”
ABS data shows that investor activity is increasing. Investor loans in October 2023 increased by 5% month-on-month, and year-on-year he increased by 12.1%.
Investors are returning to the market.Photo: Getty
Khan said investors are also seeing a surge in demand for run-down homes and renovators.
“With affordability issues like this, there's definitely more opportunism in the market than there used to be. Buyers are getting more creative about what and where they buy.”
“And for the first time, we’re seeing more calls from investors about homes that need renovation than we actually get from homeowners.”
Prices of run-down homes are rising
Paradoxically, this increased demand for affordable housing has led some renovators to sell at prices typically associated with better-looking homes.
In October, Ray White sold 19 Billabong Drive, Crestmead, near Logan, Queensland, for a staggering $494,700 after a record 161 bidders registered. did.
The property listing listed the home as “uninhabitable.”
More than 160 bidders registered for the uninhabitable house in Crestmead. Photo: realestate.com.au
That same month, a dilapidated home at 26 Myall Street in Maryland, western Sydney, attracted 25 bidders and sold for $1.64 million, well above the reserve price.
“Everyone wants something on the upswing, whether it's mortgage holders, renovation projects or fire sales,” Khan said. “People are making every effort to find those properties.”
Rapid increase in appraised value
Agents say that while they haven't seen a significant increase in sales of defective products, market valuations have increased significantly, suggesting homeowners may be struggling to pay their mortgages. He said that
“The number of sellers who want to know the latest prices for their homes is surprisingly high,” Khan said.
“People want to know how much their property would be worth if they sold it before Christmas or if they waited until January.”
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Tiller said he is also seeing valuations increase, especially with rising interest rates.
“Many people want to reduce their mortgages, buy more affordable homes and secure cash flow,” he said.
But he believes the high number of listings is not due to distressed sellers, but to sellers motivated by recent price increases.
According to the latest Prop Track Home Price Index, home prices across the country have now fully recovered the price declines in 2022, rising 5.42% year-on-year.
That means homeowners have options, Moore said.
“During the course of the pandemic, we have seen significant price increases in most parts of the country. As a result, people who are finding it difficult to get a mortgage are looking to sell or refinance large amounts of equity they have accumulated. 'can be done' has always been the case at other points in history. ”
Another cause for optimism in protecting people from fire sales is the low unemployment rate, currently at 3.7%.
“One of the biggest predictors of people having trouble with their mortgage is not an increase in mortgage costs, but job loss,” Moore said.
“Increased expenses are difficult to make ends meet, but in many cases people can manage it. A complete loss of income is impossible to make ends meet.”
