Back-to-back interest rate rises have started to hit off-the-plan buyers, with some already moving to offload their unsettled property, according to industry insiders.

Qi Chen, founder of OpenLot.com. au, a listings site for new housing developments said the number of buyers enquiring about selling or nominating another buyer to take over an unconditional off-the-plan contract had surged over the past 12 months.

‘‘We saw a large jump in the number of seller requests in 2022, which had more than doubled compared to 2021. So far, this year is continuing with the same trend,’’ Mr Qi said.

Back in 2021, only 22 per cent of the seller requests on the site were unsettled off-the-plan properties, according to Mr Qi. That rose to 47 per cent in 2022.

‘‘Based on this, we’re anticipating developers could be facing up to 5 per cent of their off-the-plan contracts failing at settlement due to buyers not being able to get finance,’’ Mr Qi warned. ‘‘In this case, the developers will need to find a new buyer to buy this property. Some buyers might be able to get away with a nomination sale if they bought early and the contract price was low. However, some could struggle if the nomination contract isn’t competitive in the resale market.’’

A nomination sale occurs when a buyer nominates another buyer to take over an unconditional off-the-plan contract, which is approved by the developer. This type of sale is usually done at the original contract price.

Diaswati Mardiasmo, chief economist at PRD said with interest rates expected to rise to 4.1 per cent this year, an off-the-plan buyer would face higher borrowing costs than at the time they were conditionally approved by their lender.

‘‘This may prompt the on selling of the contract. Whether or not they will lose the money, this depends on the clauses of the original contract,’’ Dr Mardiasmo said. ‘‘More often than not the deposit is lost, however, it depends on the contract clauses.’’

The risk of failing to qualify for a loan to settle an off-the-plan property has risen as interest rates climb higher than expected, according to Sally Tindall, director of research at RateCity.

‘‘People who might have cleared their bank’s serviceability tests 12 months ago may struggle to pass this same test today as a result of rising interest rates, particularly if they haven’t had a decent pay rise in this time.’’

RateCity estimated that a solo buyer with no dependents and earning $100,000 when they signed the contract could now only borrow a maximum of $582,900 after the recent rate rises, which was $195,100 lower than their borrowing capacity in March 2021.

This assumes a 20 per cent deposit and a pay rise of 2.4 per cent in March 2022 and 3.4 per cent in March 2023.

For a couple with two dependents earning $200,000 at the start, their borrowing capacity has been slashed by $379,700 to $1.077 million or a 26 per cent drop in the maximum loan amount. ‘‘Arguably, the biggest challenge for buyers currently considering an off the plan purchase will be securing credit,’’ said Tim Lawless, CoreLogic research director.

‘‘Borrowing capacity has reduced and demonstrating an ability to service the loan is more challenging, especially when factoring in a three percentage point serviceability buffer.

‘‘Lenders also tend to treat high density housing sectors as higher risk due to the potential for rapid changes in the supply over the term of the loan.’’

The sharp decline in existing home prices in the past year could also drag new home prices lower and leave some off-the-plan buyers with a large shortfall, said Ms Tindall.

‘‘Some borrowers could even find themselves in negative equity before they’ve even stepped foot in the property, making it all but impossible to find finance at all, unless they can find extra cash elsewhere.’’

Anna Porter, a qualified valuer and principal at Suburbanite warned that the burden of higher interest rates and falling values could push many off-the-plan buyers into financial distress.

‘‘I expect there will be a lot of this occurring this year and next. I’ve seen it many times in the past when there’s been market corrections,’’ Ms Porter said.

‘‘The real challenge is interest rates are going up. Even though rents might have increased over the last 12 months, which help investors, higher rates have exceeded that, so they still have very low serviceability.’’

Mark Bainey, chief executive of Capio Property Group said while all the buyers of the company’s developments have so far gained enough capital growth to meet their settlement, the ongoing interest rate rises could start to erase some of those.

‘‘Most of our buyers who purchased during the COVID boom have had enough growth in the property to at least meet the contract price,’’ Mr Bainey said.

‘‘We’re not seeing anyone coming in under contract price so far, but maybe with a couple more rate rises we’ll start to see some of those issues.

‘‘So we’re talking to our buyers a lot sooner than the settlement date. We’re giving them six months’ notice, and we’re actively engaging with them to make sure that they are talking to their banks.’’

Mike Davis, Stockland executive general manager for Masterplanned Communities, said while there was uncertainty around interest rates, structural drivers remained supportive, with a strong labour market, increasing levels of migration, and constrained land supply.

A Mirvac spokeswoman agreed and added that limited new supply and strong resumption of immigration were helping to stabilise prices.