Home sellers in pockets of Melbourne are dropping prices and saying they “must sell”, as experts warn the number of distressed listings will increase as the property downturn continues.
asserted
downturn → drop → listings
Melbourne City Council, Dandenong and parts of Stonnington and Casey topped the list for distressed listings in Domain data for August, with over 2 per cent of listings in these areas noting sellers were “motivated to sell”, pursuing an “urgent sale”, drawing attention to a price drop or noting a vendor “must sell”.
asserted
vendor → top → drop
Most areas experienced a small decrease in the share of distressed properties over the past year, despite falling property prices and three rate hikes during the reporting window – with another handed down on Tuesday.
asserted
areas → experience → Tuesday
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.
uncertain
that → say → owners
“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.
asserted
they → get → levels
And I think we’re getting closer to that tipping point now,” he said.
asserted
he → think → point
“I suspect as time goes by, distressed listings will start to go up.”
asserted
listings → suspect → ?
Vendors in Melbourne City Council – which includes the CBD, Docklands, North, East and West Melbourne, Carlton and surrounds – were the most likely to be looking for an urgent or motivated sale, with 2.4 per cent of listings distressed.
Jalin Realty agent Ernest Towle said the market had been falling – particularly units in the CBD and Docklands – for some time, driving sellers to consider their options.
“There’s an increasing number of people approaching me that are interested in selling,” he said, noting that investors were often willing to make a loss, hoping to minimise the “pain” of further falls.
asserted
investors → include → falls
He said many investors thought they had bought at the bottom of the market, expecting to see a reasonable rental return as prices turned around, only to watch prices drop even further.
asserted
prices → say → return
He said buyers were making offers well below asking price.
asserted
buyers → say → price
“They’re [also] making offers on multiple properties at the same time, and waiting to see which property comes back first at the price they want,” he said.
asserted
he → make → price
In the Dandenong area, 2.2 per cent of listings were considered distressed.
asserted
cent → consider → listings
Grand Real Estate agent Dr Bhimsen Kurukundi said he found properties in the $600,000 to $650,000 bracket were still selling, mostly to owner-occupier first home buyers, but those at the top end were struggling.
“Most of them are owner-occupiers,” he said, and thought cost-of-living increases and rate hikes were forcing stressed owners to downsize.
asserted
increases → say → owners
Oliver said the jobs market has been strong, so many households having trouble affording their mortgage have been able to work more hours.
asserted
households → say → hours
But at 4.6 per cent, the unemployment rate is the highest for a few years and appears to be rising, which he thought could mean more problems ahead for home borrowers, with buyers in mortgage belt areas more stretched than those in high-income areas.
uncertain
buyers → appear → areas
Kurukundi thought vendors felt more pressure to take lower offers rather than holding out for more in a falling market.
asserted
vendors → think → market
“The interest rate hike [on Tuesday] is just another stab in the back,” he said.
asserted
he → say → back
He thought some investors who were selling had bought recently hoping to make short-term profits, only to find flat growth exacerbated by recent legislative changes.
asserted
growth → think → changes
One vendor he knew had spent a significant amount renovating only to find the price roughly the same after owning it for five years.
asserted
price → know → years
“So there’s not too many properties on the market now, mostly because vendors are worried that they won’t get what they want,” he said.
asserted
he → ’ → what
Casey Estate Agents agent Vas Selvaraj said there was an urgency among sellers to “offload” properties in the Casey – South region – where 2.2 per cent of listings were distressed, across suburbs like Cranbourne, Clyde, Rosedale and Tooradin.
asserted
cent → say → Cranbourne
“I don’t think most people can foresee any growth in the next five years,” he said, despite thinking the area was previously a good investment.
asserted
area → think → years
He thought rate hikes were only part of the picture, with sellers’ fears compounded by changes to negative gearing and capital gains tax, as well as previous Victorian land tax increases for investors and the war in the Middle East.
asserted
fears → think → East
He said vendors were increasingly willing to cut prices, and was surprised the share of listings considered distressed in Casey was so low.
asserted
share → say → Casey
“There’s been a price reduction on more than 50 per cent of my listings,” he said.
asserted
he → say → listings
“And I think there’s still nervousness that it could go down even further.
uncertain
it → think → ?
People are still holding off, especially first home buyers.”
asserted
People → hold → ?
The Aporia
