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“It means buyers are able to make their own choices. With more stock on the market, buyers are able to set their own prices, and that’s what’s causing values to drop in many markets,” she said.
“It also means it’s even more important for sellers to assess market conditions before attempting a spring selling campaign. They may actually be better off waiting until a quieter time of the year when there is less competition.”
Rising interest rates are putting pressure on homeowners. Credit: Simon Schluter
Owners who need to sell can benefit from a well-appointed, staged home for sale and a real estate agent who provides a high level of service, but she encourages owners who are struggling to find their options with a bank or mortgage broker who may be able to help.
AMP chief economist Dr Shane Oliver said the increase in the number of properties with mortgages indicated mortgage stress was rising for those homeowners who still had high mortgage debt.
“People can hold out for a while, but rates have been high for a long time,” he said, “and you’re gradually starting to see some selling in some areas.
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“This is all consistent with mortgage stress starting to bite some homeowners, who are thinking the best thing to do might be to take advantage of the reality that house prices are still rising and go out and pay down their mortgages.”
He stressed that most homebuying borrowers had been able to hold out so far, tapping savings, paying off mortgages early, working overtime or getting help from family members.
“It’s not a disaster, you’re not going to see a crash here,” he said. “But it’s a warning sign. There’s a lot of pressure on both investors and owner-occupiers.”
“The risk is that the longer rates rise, the more those sources of support start to dry up and we do run the risk of seeing more distressed assets come to market.”
Job market data released Thursday showed the unemployment rate rose slightly to 4.2% in July. Oliver said a sharp rise in the unemployment rate would be a risk, but so far workers are not losing their jobs, there just aren’t enough jobs for new entrants to the labor market to choose from.
Many homeowners have been able to pay off their debts and hold on, but not all have been able to do so.Credit: Reed Wyman
Westpac senior economist Matthew Hassan noted that mortgage stress had been rising but remained at historically benign levels and there had not been a major sell-off of distressed loans.
“You could probably infer that there might be more pressure in those areas. But there might be other drivers behind these decisions,” he said.
For example, homebuyers looking to upgrade are selling their homes, while first-time buyers are struggling to enter the market, which can lead to an increase in the supply of homes for sale.
Other homeowners may want to move due to personal circumstances or stage in life but have been put off by lockdown and the subsequent tightening cycle in interest rates, so are selling now.
But he said some owners had decided to sell despite not being in the most favourable conditions.
“Whether it’s a good time to sell varies a lot between markets and in Melbourne it’s not a particularly good time to sell so in Melbourne when you see these listings it probably means there’s a bit of urgency,” he said.
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