Distressed sales at record lows

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Looking for an decent property on sale for a bargain price?

For many investors, this is their fundamental goal, and scouring distressed property listings has been a good way to go about achieving it.

However, new data shows that - in the current market – this time-worn method may not be so fruitful.

According to the latest LandMark White Forced Sales Monitor, during the June quarter 2014, only 41 distressed properties were advertised.

This is the lowest number of the series so far, Landmark White managing director Robert Wilson said.

“By way of comparison, the June 2013 quarter saw 95 distressed sale advertisements… The number has been steadily declining in absolute and proportionate terms since.”

The data also shows that:
  • Queensland had the highest proportion of distressed assets for sale of any state. The Sunshine State made up 46% of the national total during the three months to June 2014 and 55% in the year-to-date.
  • Victoria’s share of national receiver sales listings fell to 12% in the June quarter 2014 from 16% in the previous quarter. Over the year-to-date, it accounted for 12% of the total national listed sales.
  • New South Wales’ share of national distressed listings fell from 28% in the March quarter to 24% in the June quarter 2014. For the year-to-date, it had a 22% share of national distressed asset listings.
Wilson said that, despite a growing preference for digital alternatives, distressed sales were more likely to be advertised in the national press as receivers and mortgagees wanted maximum exposure to relevant markets.

Yet still receiver sales appeared to have fallen as only 16% of listings were distressed assets in the year-to-date as compared to 27% in the previous year.

Improved post-GFC economic conditions and the increased serviceability of loans – thanks to low interest rates – were the main reasons for this.

Wilson said receiver sales were likely to bottom out in the next two quarters with a slight increase as interest rates inevitably begin to rise again.

“This will place pressure on property owners who may find themselves overleveraged under current favourable borrowing conditions.”

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