Whether it’s shades of things to come, especially in light of the Reserve Bank’s (RBA) last rate rise to 4.35%, the market witnessed a notable jump in distressed property during October.

SQM Research’s latest report reveals the number of residential properties being sold under distressed conditions in Australia in October soared 5.2% to 5,521 from 5,246 a month earlier.

Unsurprisingly, distressed selling activity was highest within the state with the most expensive houses. In NSW, where the mean price of residential dwellings is $1,167,500 (ABS data), distressed listings were up 8.9%, followed by WA up 7.6%.

But in percentage terms, the ACT experienced the most substantial increase, having jumped 35% on the previous month.

As the following table indicates, SA and NT both recorded a decrease in distressed listings.

Older listings are declining

SQM Research data also reveals that all cities experienced a decline in older stock (properties listed for over 180 days) during the month.

However, it’s important to remember that this figure still represents a 15.6% increase over the past 12 months.

Total listings still growing

Nationwide, residential property listings during October witnessed a modest 0.9% decline, but over a 12-month measure – they experienced 3.0% growth.

SQM Research attributes the marginal decrease to a substantial reduction in older listings across all major cities offsetting the increase in new listings.

Driven by a 7.6% increase in new listings, Melbourne recorded a 1.6% increase in total listings for the month of October, followed by Canberra which recorded a 4.7% increase.

On the flipside, driven by a 13.9% decrease in older listings for the month, Perth witnessed the most significant percentage decrease in total listings among capital cities, down 6.7%.

New listings

While nationally, new listings (less than 30 days) rose by 2.7% in October, both Sydney and Darwin reported declines of 2.3% and 1.5% respectively.

However, a noteworthy surge in new listings (8.4%) was witnessed in Hobart.

Asking price

All house’s asking prices witnessed an increase in October, with the national combined dwelling asking price up 1.2% – to hit a record high of $805,680.

Asking prices for capital cities also increased by 0.7%, marking a 7.5% rise on October 2022.

Sydney’s units asking price saw a notable increase of 2.2%, while Adelaide’s units asking price showed a more modest rise of 2.4%.

Overall, vendors remained confident for the month as displayed to the new record high in asking prices

Will price increases reverse?

PEXA chief economist Julie Toth expects the RBA’s recent decision to raise the cash rate earlier this week, to trigger a welcome pause in the pace of dwelling price growth, as witnessed after the first increases in May last year.

However, she doesn’t expect to see another [price] fall.

What’s more likely, adds Toth is a  burst of activity in refinancing.

Meantime, Louis Christopher, managing director of SQM Research suggests market watches keep a close watch for signs of a continued rise in the number of residential properties being sold under distressed conditions in November.

Given what we know about seasonality for this time of the year, he expects a significant rise in listings for the month of November.

“It is interesting we recorded a sizeable fall in older listings, which implies stock absorption rates were up in October,” said Christopher.

“Overall, vendors remained confident for the month as displayed to the new record high in asking prices.”