Highlights

• According to SQM data summarised by property news site Faribai, South Australia's distressed listings jumped 91.1% over the year, close to double their level of.

• Distressed stock remains a sliver of the total.

• The ABC cited two main pressures: the Reserve Bank's fourth cash rate rise this year, and the federal Budget's changes to negative gearing and capital gains tax.

• For owners who do sell below what they paid, the tax treatment of the loss matters.

Distressed property advertisements remain a minority of listings, but their pace of growth is drawing attention. Higher financing costs and slower sales are testing the resilience of some owners.

The States Driving the 29% Jump

According to SQM data summarised by property news site Faribai, South Australia's distressed listings jumped 91.1% over the year, close to double their level of September 2025. Western Australia recorded a 64.3% annual increase, and Queensland 47.5%. Queensland also has the largest number, at 1,655 distressed listings, up 10.6% in September alone. The ACT posted a 93.9% annual rise, though from a much smaller base. New South Wales was up a more modest 10.6% to 1,054 listings. Victoria went the other way, with distressed listings down 0.4% over the year, while Tasmania's fell 21.0%. The pattern partly reflects where prices ran hardest. The distinction matters because the headline rule rarely tells the entire story. Timing, eligibility and supporting records can change the outcome for two people facing seemingly similar circumstances.

Still a Small Share of a Swelling Market

Distressed stock remains a sliver of the total. SQM counted 276,839 listings nationally in September, up 2.6% in the month and 21.6% over the year, putting distressed listings at under 2% of all homes for sale. What has changed is how long homes are sitting unsold. The ABC reported that listings older than 180 days are up 10.5% on a year earlier. The bulk of the increase is property that has been on the market for one to six months and hasn't sold, SQM Research's Louis Christopher told the ABC. A practical decision starts with the numbers, but should not end there. Compare the likely benefit with compliance costs, the chance that assumptions change and any restrictions that apply.

Rates, Falling Prices and Tax Changes

The ABC cited two main pressures: the Reserve Bank's fourth cash rate rise this year, and the federal Budget's changes to negative gearing and capital gains tax. 1 Act, negative gearing will be limited to new builds starting 1 July 2027 for residential property bought after 7:30pm AEST on 12 May 2026. The 50% capital gains tax discount will be replaced with cost-base indexation and a 30% minimum tax for gains accruing after 1 July 2027. A policy can create an opportunity while still leaving taxpayers responsible for checking the conditions and keeping suitable evidence.

When a Forced Sale Becomes a Capital Loss

For owners who do sell below what they paid, the tax treatment of the loss matters. Tax guidance indicates: You can't deduct capital losses or a net capital loss from your other assessable income. One observation is useful context, not a guarantee about what happens next.

A Signal, Not Yet a Flood

Distressed listings tend to be an early indicator rather than a measure of widespread hardship. Under 5,000 listings across a national market of more than 276,000 is a small number. Cash flow, deadlines and documentation deserve attention before any commitment.

What to Watch Over the Coming Months

SQM's October listings data, due in early November, will show whether spring has turned into a buyers' market or sellers are pulling back. The central bank's next decisions on the cash rate will be closely watched by stretched borrowers. Proposed rules and draft administrative guidance should be distinguished from provisions already enacted.

General information only. This article is educational and does not constitute personal financial, tax or legal advice.