Don’t believe the hype. Everyone is trying to sell you something.
Ok, so here’s an exercise in cutting through media hype.
The AFR (who should probably know better) was running an article the other day under the dramatic headline “Distressed Listings Blow Out as Interest Rates Bite.”
It caught my eye.
The number of distressed listings nationwide has jumped by more than 15 per cent since interest rates started rising in May as more vendors struggle to meet sharply higher mortgage repayments, data from SQM Research shows.
“I think the seven straight rises are now starting to bite,” said Louis Christopher, managing director of SQM Research.
“The market can handle a 25 basis point rise and even a 50 basis point rise, but it’s been happening each month for the past seven months so sooner or later it’s going to catch up with some property owners.
“As we get more rate rises, the number of distressed properties will rise as more households struggle to keep up with their mortgage repayments.”
Wow. A 15% increase. That’s a big lift.
So how many are we talking? In a big state like NSW? 100,000? 200,000?
Queensland posted the biggest increase in the number of properties selling under distressed conditions, rising by 588 homes or 26.7 per cent to 2791 according to SQM Research analysis.
In NSW, distressed listings jumped by 353 homes or 38.7 per cent to 1265, while Victoria added 99 distressed properties or 14.9 per cent to 765.
Distressed listings rose by 14 properties in Tasmania, three in the ACT and one in SA. WA and NT both recorded a drop in the number of distressed listings by 130 and two properties respectively.
In the past four weeks alone, the number of distressed listings increased sharply across Brisbane, up by 15 per cent to 1000 properties, the largest rise across all capital cities.
Seriously. 765 homes in Victoria listed as ‘Must Sell’ is hardly going to move the market.
I’d barely think it was worth writing about.
Same story with ‘stale listings’ – listings that have been on the market over six months. They’re up too, but still barely statistically different from zero.
The number of properties that have been sitting on the Sydney market for more than six months has increased by 3.3 per cent in October to 4650 properties.
Stale listings rose by 5.9 per cent to 2378 in Brisbane, were up by 1.5 per cent to 7082 in Melbourne and by 1.8 per cent to 4247 in Perth.
So yes, they’re up. Yes, in percentage terms it’s a big increase.
But the market is hardly in a panic.
But expect to hear more of this from real estate agents (who get commissions) and papers like the AFR (who sell ad space). You need to sell and you need to sell now.
Sell, sell, sell. Panic, panic, panic.