14 Walbundry Ave, Balwyn North, set the pace for Melbourne with a $3.25m sale under the hammer on July 8.
Victorians forced to sell their homes by rising interest rates are expected to hit the market as Melbourne’s auction calendar kicks into full gear in October.
One of the state’s busiest auctioneers has revealed he expects to be calling sales on behalf of vendors overwhelmed by rising mortgage costs this spring, and the head of Ray White in Victoria is also starting to see signs of mortgage-pain listings.
It comes as new figures this week revealed mortgage delinquencies are rising across Australia, and as PropTrack data showed Victoria’s preliminary auction clearance rate reached 67.8 per cent from 429 results yesterday.
Ray White Victorian chief executive Stephen Dullens said while he was having “more and more of these conversations than I was six months ago”, most selling due to rising rates so far were offloading investment or holiday homes.
Sold By Auctions professional auctioneer Andy Reid, who has already put “a few hundred” homes under the hammer this year, said vendors getting in before their bank made them sell had been “slowly dripping through for a short time already” — including families who had inherited their parent’s home.
“But straight up defaults are likely to be on the way,” Mr Reid said.
Two buyers pushed 12 Stiles St, Mt Martha, to a strong result $90,000 above a sworn valuation yesterday, showing ongoing demand from buyers.
He pegged October and November as the months to watch for forced sales from homeowners whose cheap fixed rate loans would end in substantial numbers this month and next, but he said many families would do everything they could to keep their home until at least Christmas.
“February next year is going to be a very, very interesting month, especially once that first interest rate decision comes through,” Mr Reid said.
He noted it was possible a reserve bank decision to lower interest rates between now and then could save some owners from selling, and most would do everything they could to avoid a forced sale.
The comments come after Moody’s Investors Service this week released new figures showing the number of Australians at least 30 days behind on their mortgage has surged.
For prime mortgages, those with extensive documentation and issued to borrowers with good credit ratings, the share of owners who are behind on their mortgage in March this year accounted for 1.26 per cent of loans. It was just 1.17 per cent a year prior and is climbing back towards its last peak, set at 1.76 per cent in March 2020.
13 Hillside Rd, Bulleen, was also among Melbourne’s top sales results at auction on July 8 — selling for $3.02m via RT Edgar Manningham.
For loans issued with less documentation or to people with poor credit history, the figure has reached 4.04 per cent, up from just 2.91 per cent a year ago.
The Moody’s report predicted delinquencies would continue to rise as more borrowers were swapped from cheap fixed interest rates to variable rates up to 4 percentage points higher, but noted strong employment figures would stop numbers soaring.
Real Estate Institute of Victoria president Andrew Meehan said he hadn’t seen signs of forced sales, but noted vendors could be the winners from a decision by the reserve bank to pause interest rates at 4.1 per cent this week.
“Everything is pointing towards a good spring … I’m certainly hearing of listings coming up, and certainty (from the RBA) in spring could help the market,” Mr Meehan said.
Ray White’s Jamil Allouche said there was already confidence in the market, with a four-bedroom Greensborough home sold $205,000 above reserve amid bidding from six parties yesterday.
19 Willis St, Greensborough, sold six figures above expectations.
Mr Allouche said families had driven the bidding for the 19 Willis St home, and with strong results like it emerging, he was expecting an uptick in homes for sale in the near future.
And on the Mornington Peninsula, Belle Property’s Grant McConnell had competition for a two-bedroom shack he’s expecting will be demolished and replaced with a new home.
Mr McConnell said two bidders fought it out for 12 Stiles St, Mt Martha, after he kicked the auction off with a $1m vendor bid.
On the market at $1.1m, the same figure as a sworn valuation for the property being sold as a deceased estate, offers continued until a $1.19m sale.
“We had two bidding and three registered, with a crowd of 30 people there,” he said.
With the sale topping the valuation and a good crowd for the area, Mr McConnell said there was clearly demand for the bayside suburb.