The Sydney suburbs where property owners are selling in distress

At least one in 20 home sellers in some pockets of Sydney are selling in urgency or distress, and experts warn that could rise as mortgage repayments jump and property prices weaken.In parts of the western suburbs, investor buyers have dropped out of the market, home owners are taking the opportunity to upgrade and need to sell, and sellers frustrated by homes taking longer to sell are keen to secure deals.The share of distressed property listings is at low levels and falling across Sydney overall, at 1.8 per cent for August, on Domain data, as home owners are likely to prioritise keeping up with mortgage payments above other spending amid the cost-of-living crisis.But the overall figure masks pockets of weakness. In the Hawkesbury region, 8 per cent of listings were considered distressed.This was followed by the Richmond/Windsor area (6.8 per cent), Blacktown (5 per cent) and the Merrylands/Guildford area (4.9 per cent).The data refers to the proportion of properties listed on Domain.com.au considered urgent or distressed – advertisements marked with language such as “price reduced” or “vendor must sell”.This week’s decision by the Reserve Bank to increase the cash rate to a 15-year high of 4.6 per cent is set to put stretched home owners under more pressure to keep up with their loan repayments. At the same time, potential buyers have been hesitant, as property prices fall.AMP chief economist Shane Oliver said distressed listings had remained low overall so far because interest rates had not yet hit a threshold that would cause significant problems for home owners - but that could be set to 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. And I think we’re getting closer to that tipping point now,” he said. “I suspect as time goes by, distressed listings will start to go up.”He said the jobs market has been strong, so households have worked more hours if needed. But at 4.6 per cent, the unemployment rate is the highest for a few years and appears to be rising.He said mortgage belt areas are more stretched than high-income areas.“Mortgage stress and risk of defaults and distressed listings are probably higher for lower income earners, and they tend to be in lower price points in terms of the property market.”In the Richmond/Windsor area, VIBE Property selling agent Michael Mahboub thought the budget’s changes to investment property taxes had dissuaded potential investors from buying.He said there used to be “heaps” of investor buyers in his area, as many as one in two or one in three. Since the budget, he estimates the figure is closer to one in 10. He has also seen a wave of investor sellers before the capital gains tax discount changes in July next year.He said owners keen to sell are open to adjusting their price hopes. “Like always, if you’re genuine about selling you’ll meet the market,” he said.He has for sale, for example, a Windsor terrace home described online as “Owners want to meet the market and sell!”Elsewhere, McGrath Hawkesbury selling agent Greg Vincent thought some agents might use the language of distressed listings in their marketing material as a tool.“In this market, the difficulty is trying to create a sense of urgency for a buyer, so that may be some of the marketing dialogue that the agents are using to try to create that sense of urgency,” he said.“There are still genuine buyers in the market but they’re just more considered, they’re doing their homework, they’re much less likely to compromise because they’re worried about missing out.”He said well presented properties can still generate competition.“[But] If the price and the market aren’t aligned, buyers are obviously prepared to wait for the next property to come along,” he said.“The average days on market is one of the things that have become prolonged, and it does get to a certain point where owners will get to that point in time where they go, ‘We want to get going.’ ”Ray White (United Group) selling agent Marc Haddad, who sells in areas including Blacktown, said some owners had been taking the opportunity of the weaker market to sell and upgrade to their next home.“A lot of people are upsizing at the moment, so if they’ve purchased a property and need to settle, that’s one reason they’d be very motivated,” he said.He said the market was competitive for sellers.“For owners, they’re having to be competitive in terms of pricing to sell. It’s always been a very competitive market but at the moment it’s even more competitive.”Property listingsFrom our partners