The Sydney Morning Herald reported on May 11 that Sydney's homeowners are struggling with mortgages and financial pressures, with some areas having the highest rate of property sales in the city.
The 13 rate hikes over the past two years have already left some homeowners struggling, choosing to put their homes or investment properties up for sale before banks force them to sell.
In the Blacktown area, urgent sales accounted for 13.2% of total listings in April, which is a significant increase from 8.7% a year ago, according to Domain.
(Image source: The Sydney Morning Herald)
Urgent sales in Parramatta are as high as 8.3 per cent, and in Merrylands/Guildford, Richmond/Windsor and Fairfield, urgent sales account for at least 7 per cent of all listings, although these areas are down from a year ago.
Overall, 3.1% of properties for sale in Sydney last month were seen as urgently sold, down from 4.6% a year ago but higher than most other cities, and experts warn that this proportion could rise again if interest rates remain high for a long time.
Urgent listings are made by choosing a few keywords in the property advertisement, such as "urgent sale" and "urgent sale", which imply that the homeowner needs to sell the property quickly.
"Sydney's mortgage holders are under pressure and I think we're all feeling the impact of interest rate hikes as well as the cost of living," said Nicola Powell, research and economist at Domain.
(Image source: The Sydney Morning Herald)
She said that compared to other cities, property prices in Sydney are higher, and buyers need to take on more debt, and even buyers of second homes have little equity.
The decline in the proportion of homes for sale shows that many households are avoiding the need to sell their property by dipping into their savings, finding more jobs or cutting back on non-essential expenses, while rising house prices in Sydney are helping homeowners who need to buy a home. But this can only last for a while.
"Now, the cash rate is likely to remain high for a long time due to rising inflation, and the longer interest rates remain high, the greater the risk for some households," she said.
She also said that the proportion of urgently sold listings could rise as interest rates are expected to cut next year.
In Blacktown, Harcourts Unlimited's managing director Andrew Chrysanthou said he is seeing more and more investors putting their properties on the market because there may not be as many benefits to holding them compared to when interest rates were low.
"If the property doesn't generate revenue, they're losing $2,000, $4,000 a month," he said. "However, due to rising land taxes and interest rates, some properties are not worth holding."
(Image source: The Sydney Morning Herald)
But he stressed that in his area, there are more buyers than homes for sale, and almost all of his auctions have been sold.
Shane Oliver, chief economist at AMP, said the enormous economic pressure on homeowners was largely driven by high interest rates, as mortgages as a percentage of household income reached record levels.
Oliver said desperate homeowners were "pushed to the edge" and forced to put their properties up for sale, Oliver said.
"Normally, they have done their best, including talking to the bank (about reducing repayments)," he said.
Oliver said many homeowners have been waiting for a rate cut and now it looks like it could take longer.
"Unfortunately, I think it could get worse before it gets better," he said.
"People who were just waiting for a rate cut had been asking their parents for help as much as they could, and now suddenly they have to wait another six months, which has pushed them to the edge and led them to decide to sell their property."