Queensland dominates distressed property sales

Queensland accounted for more than half the distressed property sales across Australia in October and most of November, with development sites in regional areas topping the list of distressed assets across the state, according to research by valuer LandMark White.

Queensland represented 52.9% of all forced sales (mortgagee in possession or receiver sales) across Australia in October and up to November 22, followed by NSW (26.1%) and Victoria (7.8%).

Western Australia and South Australia accounted for 5% of distressed sales each.

LandMark White monitoring of investment sales from October 1 to November 22 as part of its Forced Sales Index found that 153 out of 489 listings were distressed sales, equating to just over 31%.

The percentage of distressed sales in November currently sits at around 36%.

The valuer attributes the increase in distressed sales to a prolonged period of limited growth and transactions, with owners and financiers holding onto their assets in anticipation of a market recovery that has not eventuated.

Within the sunshine state, development sites accounted for more than 60% of forced sales, with nearly two-thirds of these sales occurring in regional Queensland, most notably the far north of the state.

Reflecting the current depressed state of the Queensland housing market, 33 residential properties were listed as distressed the sales, the highest number across asset classes followed by retail and office properties.

By contrast in NSW industrial assets represented almost a third of distressed sales, followed by offices at around 20%. Residential distressed sales made up just over 10% of all distressed sales.

Commenting on the high proportion of distressed industrial property sales in NSW, LandMark White says it may have been the case that these properties were land banked for future development as the industrial market grew, but were hurt by rising holding costs and a reduction in demand.

The small number of residential distressed sales was a reflection of the growth in median house prices in Sydney from 2009 to 2011, the valuation firm says.

Across the country, residential assets accounted for the highest proportion of distressed sales (27.5%) followed by industrial (25.5%), retail (20%) and office assets (15%).