Low number of distressed property sales, for now at least: REA's Nerida Conisbee
EXPERT OBSERVER
A comparatively low number of mortgagee sales hints at positivity for the property market, however, levels of home owner distress may be revealed in coming months.
Meanwhile, demand for homes outside of capital cities continues to soar as buyers search for property in regional Australia.
No signs of distress a positive for property
There are many levels of distress in property markets but one of the most extreme circumstances is when the bank takes ownership of your home and it becomes a mortgagee sale. Positively, the number of mortgagee sales is currently very low (only five listed on realestate.com.au) and they are in fact lower than at the same time last year.
The biggest decline in mortgagee sales has surprisingly been for apartments. Although we are seeing rising listings in areas with large numbers of apartments, those listings aren’t mortgagee sales. While this is good news on the surface, some owners may be in challenging situations but just haven’t moved to the highest level of distress yet.
It’s worth noting that although we haven’t seen high levels of distress yet, we may start to see this increase in the coming months. The mortgage payment freezes being offered by many banks will come to an end and unemployment doesn’t look like it is going to rapidly decrease any time soon.
More positively, banks are still well capitalised and are more likely to work with home owners under stress rather than take possession of their homes. We are also not seeing rapid declines in house prices so that will help ensure that home owners aren’t left with a bigger loan than the house is worth if they need to sell.
NERIDA CONISBEE is the Chief Economist at the REA
