Despite another cash rate hold in October, experts believe households could still be at risk of falling behind on mortgage repayments well into next year.
One Canberra region appears to have a much higher risk of mortgage stress and distressed sales, with double the proportion of owner-occupier mortgages than inner Canberra regions.
The ACT has some of the lowest levels of mortgage arrears in the country but more Canberra households fell behind on repayments in the three months to the end of June compared to the previous quarter.
S&P Global director of structured finance Erin Kitson said mortgage arrears were trending up amid higher interest rates, but they were still "hovering around long-term averages".
There were a number of factors keeping mortgage arrears low, including the low base they started from and high savings buffers many households had accrued, she said.
More importantly, unemployment remained at historically low levels, Ms Kitson said.
"That's really important when you're looking at and talking about mortgage arrears because loss of income is a key cause of mortgage default," she said.
The ACT had one of the lowest levels of mortgage arrears compared to the rest of Australia, S&P Global's latest quarterly data found.
It found 0.69 per cent of ACT households experienced 30-plus day arrears in the June quarter, up from 0.55 per cent the previous quarter.
This was in line with long-term trends, Ms Kitson said, thanks to Canberra's low unemployment, high job security and higher incomes.
Data points to 'motivated' sellers
Data analysed by property firm CoreLogic found Molonglo had the highest portion of owner-occupier mortgages than any other ACT region.
The region had 2707 owner-occupier mortgaged households in the 2021 census, representing 65 per cent of households.
Gungahlin was next with 14,394, or 48 per cent, owner-occupier mortgaged households.
North and South Canberra had the lowest levels of owner-occupier mortgages, representing 30 and 31 per cent of households respectively.
CoreLogic head of residential research Eliza Owen said the data showed an unsurprising trend.
"That's a common theme that we see in the heavily mortgaged areas of capital cities - they tend to be areas that are a bit more urban sprawl, they've seen rapid population growth and a lot of the demographic is young families," she said.
Using the data, CoreLogic then looked at listings and values metrics to determine the Canberra regions where distressed sales could occur, or might already be occurring.
Gungahlin stood out as an area at risk of more forced sales, Ms Owen said, due to the number of mortgaged households and a "fairly expensive" median property value of $878,642.
"Mortgage serviceability has likely become more of a challenge amid these relatively high price points and a rapidly rising interest rate," she said.
Even more telling was that total listings, or properties currently for sale, were 16.8 per cent higher than the five-year average in August, despite lacklustre property value performance.
"You do have to ask yourself ... why is it that new listings would be rising through winter in the first place when usually they don't?" Ms Owen said.
"And for an area like Gungahlin, why would new listings be rising in an area where property market performance has actually been pretty flat and values are down over the past 12 months?
"That's where you might infer that there's more motivated selling going on here than just for capital gain."
Rise in short-held listings
Short-held listings, those that have been held for less than three years, are on the rise in Canberra, which could be another sign of distressed selling, Ms Owen said.
In the three months to August, short-term resales made up about 12.5 per cent of new listings in Canberra compared to the previous average of about 7.5 per cent.
Ms Owen said that was another indicator that "something is inducing people to sell where they wouldn't normally sell".
Ultimately, the data could not tell for certain how many distressed sales were happening in Canberra, she said.
"It could also be that home values have risen 27 per cent since March 2020 and maybe people want to take advantage of those capital gains and that's why they're selling," Ms Owen said.
Arrears could rise into 2024
Despite four consecutive cash rate holds, households are not out of the woods yet.
Ms Kitson expected mortgage arrears to continue rising and peak in 2024, as they are a lagging indicator.
She said how much longer they continue to rise will "very much be predicated on the trajectory of interest rates from here out".
A record 1.57 million mortgage-holders were considered "at risk" of mortgage stress in the three months to August, the latest Roy Morgan data shows.
The data, which encompassed one interest rate rise of 0.25 per cent in June, found 30.2 per cent of mortgage-holders fell into the "at risk" category.
Roy Morgan considers a mortgage holder "at risk" of mortgage stress if their repayments are more than a certain proportion of their after-tax household income. The amount is between 25 per cent and 45 per cent, depending on income and spending.
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