Distressed property listings jump 42pc as unsold homes pile up - realestate.com.au

Listings of distressed properties have surged by over 40 percent within the past year as homes are taking longer to sell, giving buyers more leverage in the market. This trend, described as “concerning” by a prominent property analyst, is highlighted in the latest data from SQM Research.

In October, the number of distressed properties listed for sale across Australia rose by 10.2 percent to reach 5,368, marking the highest total since late 2024. This figure represents a significant increase of 42.3 percent compared to the same month last year, with all states and territories experiencing a rise in distressed listings.

As the total number of homes available for sale in Australia surpassed 300,000 for the first time in over five years, concerns are growing regarding weakening buyer demand and increasing pressure on sellers. Queensland led the states with the highest number of distressed listings, totaling 1,904, which is an increase of 71.2 percent year-on-year. South Australia saw the most dramatic annual rise at 84.9 percent, with Western Australia following closely at 75.8 percent.

Louis Christopher, managing director of SQM Research, expressed his concerns about the upward trend in distressed sales. “What we are watching most closely is the rise in distressed listings,” he stated. “These numbers are still relatively small, but distressed listings have been rising steadily since early 2026 and are now at their highest level since late 2024.”

Nationally, the number of distressed listings has risen approximately 60 percent since hitting a low of around 3,300 earlier this year. Despite this rise, distressed properties still make up just 1.8 percent of all advertised stock, compared to 1.5 percent a year prior.

The overall market is also exhibiting signs of deceleration, as total residential listings increased by 8.8 percent in October to 301,201 properties, reflecting a year-on-year rise of 19.3 percent. Brisbane reported the highest annual increase among capital cities, with listings jumping 44.2 percent to 23,489. Adelaide followed closely behind with a 43.8 percent increase, while Perth saw a rise of 27.8 percent.

Melbourne and Canberra have reached unprecedented levels of advertised stock; however, Christopher noted that this accumulation is not due to a surge in new sellers. “Fresh listings in both cities are lower than a year ago, so this is not a rush of new sellers. It is stock accumulating because it is not selling, which points to soft buyer demand in those markets,” he explained.

The number of properties on the market for between 30 and 180 days has surged by 41.1 percent nationally over the past year, which accounts for nearly 80 percent of the total increase in listings. Meanwhile, new listings are currently 1.2 percent below the level seen in October of the previous year.

This growing mismatch between available properties and buyer demand is exerting further pressure on asking prices. Brisbane experienced a 2.1 percent decline in combined asking prices in the last month, while Sydney and Adelaide saw decreases of 0.7 percent and 1.3 percent, respectively.

Christopher cautioned that the remainder of the spring selling season will be a crucial test for both vendor expectations and buyer demand. “With more stock available and distressed listings rising, the remainder of the spring selling season will provide an important test of vendor expectations and buyer demand,” he noted.

In related findings, Roy Morgan reported that nearly 32 percent, or 1.75 million, mortgage holders are now facing the risk of mortgage stress. This figure is approaching the record high of 35.6 percent reached in mid-2008, during a period when official interest rates peaked at 7.25 percent.

Michele Levine, CEO of Roy Morgan, pointed to recent interest rate hikes by the Reserve Bank of Australia (RBA) as a significant factor in rising mortgage repayments, alongside declining house prices in key markets and a shrinking workforce. “The latest figures for mortgage stress are just below the record highs reached during 2008,” she remarked.

Levine also predicted further interest rate increases in November and December due to ongoing high inflation levels. If these rate hikes occur, she estimated that the percentage of mortgage holders at risk could rise to 34.3 percent, affecting approximately 1,887,000 individuals, an increase of 137,000 from current figures. “If this were to happen, the level of mortgage stress would be at its highest rate since June 2008 — over 18 years ago,” she added.