Distressed Listings Are Up 29%: They Are Still 1.8% of the Australian Market

Distressed property listings in Australia rose 29.2% year on year to 4,872 in September 2026, according to SQM Research. That is about 1.8% of the 276,839 homes listed nationally. SQM's managing director says the absolute numbers remain contained, and the Reserve Bank reports mortgage arrears near pre-pandemic levels.

Both halves of that matter, and most coverage of these figures carries only the first.

What a distressed listing is

A distressed listing is a property advertised in terms that signal the seller is under financial pressure mortgagee sales, forced sales, and listings whose wording indicates urgency. SQM Research tracks them monthly as a separate series from total listings.

It is a useful indicator precisely because it is narrow. It picks up sellers who cannot wait, which is a different population from sellers who would simply prefer to move.

The two numbers

In September 2026, distressed listings rose 8% over the month to 4,872, and were 29.2% higher than September 2025.

In the same month, total listings were 276,839 up 2.6% over the month and 21.6% year on year.

Divide one by the other and distressed listings are roughly 1.8% of everything on the market.

A 29% annual rise off a base that small produces a large percentage and a small absolute change. Both descriptions are accurate; they just answer different questions. If the question is "is this trend worth watching", 29% is the right number. If the question is "is this a market-wide distress event", 4,872 out of 276,839 is.

What the people who collected the data say

This is the part worth quoting directly, because it is unusually clear.

Louis Christopher, managing director of SQM Research, on the distressed figures: "In absolute terms the numbers remain relatively contained, but the trend is clearly upward."

SQM goes further, stating that the rise in distressed listings does not by itself indicate widespread mortgage distress.

And the Reserve Bank's Financial Stability Review found that mortgage arrears have edged higher but remain near pre-pandemic levels.

So the organisation that produces the distressed-listings series, and the central bank that monitors household financial stress, are both saying the same thing: the direction is up, the level is not alarming.

That is worth holding onto when a headline describes this data as a once-in-a-decade anything.

The movement that is actually large

Strip out the distress framing and the SQM data shows something more substantial, and more useful.

Total listings are up 21.6% year on year and the composition is the point. New listings rose 8.7% in September, but most of the annual increase came from properties that had been on the market for one to six months without selling.

Christopher's description: "That's a demand problem, not a supply surge."

The corroboration is in how long sales now take. Cotality reports capital city homes taking a median 39 days to sell, up from 23 days a year earlier. That is a 70% increase in time on market, and it is the mechanism by which stock accumulates: nothing new has to arrive for listings to pile up if what is already there stops clearing.

Asking prices are following. National combined asking prices fell 0.4% over the month to the week ending 29 September, though they remain 3.6% higher year on year. Brisbane fell 2.1%, the largest capital-city decline.

There is also a quieter signal in how properties are being sold. Auction listings were down about 20% year on year as of July, with vendors increasingly choosing private treaty. Sellers move away from auctions when they are not confident of competitive bidding on the day.

Where it is concentrated

The national figure conceals wide variation, and the states with the steepest distressed-listing rises are not the largest markets.

Distressed listings, annual change to September 2026:

Queensland now has the most distressed listings of any state, at 1,655 — about a third of the national total.

Total listings, capital cities, September 2026:

Sydney is the interesting case: new listings are 9.4% lower than a year ago while total stock is 19.3% higher. Fewer people are putting homes on the market and more homes are staying on it.

Hobart is the only capital with less stock than a year ago.

One more reason to read these numbers carefully

The distressed-listings series moves fast, which is its own warning about drawing conclusions from any single month.

In July 2026, SQM recorded 4,330 distressed listings up just 0.9% year on year. Two months later the annual change was 29.2%. Over the same period New South Wales and Victoria were slightly negative in July and the national figure was driven by South Australia and the ACT.

A series that can go from flat to 29% in two months, on a base under 5,000, is volatile by construction. That is not a criticism of the data; it is how small-number series behave. It is a reason to watch several months rather than react to one, and a reason to be sceptical of anyone building a thesis on the most recent print.

What this does and does not tell a reader

What the data supports: buyers in several capitals, particularly Brisbane and Adelaide, face markedly more choice than a year ago, and properties are taking substantially longer to sell. Christopher put it plainly: "Buyers in these markets have significantly more choice and, in turn, more negotiating power."

What the data does not support: that Australia is in a distressed-asset cycle, that mortgage holders are failing in large numbers, or that any particular market is cheap. Arrears are near pre-pandemic levels on the RBA's own assessment, and distressed stock is under 2% of listings.

Those are different claims and they need different evidence. A buyer's market is about negotiating position. A distress cycle is about forced sellers. Australia currently has clear evidence of the first and limited evidence of the second, and the gap between them is where most of this week's property commentary is operating.

The next SQM listings release is the thing to read, and the figure to watch is not the percentage change in distressed listings. It is whether days-on-market keeps rising.