Other Real Estate Owned (OREO) in Australia: 2025 Insights for Buyers & Investors

In 2025, the term Other Real Estate Owned (OREO) is re-emerging in Australia’s property landscape. As banks and lenders adapt to shifting market conditions, more buyers and investors are encountering OREO listings—properties that have been repossessed by lenders after unsuccessful auctions or foreclosures. While OREO is a well-known acronym in the US, Australian investors are now seeing it appear in local property circles, with unique opportunities and risks attached.

OREO Explained: From Bank Repossession to Buyer Opportunity

OREO stands for Other Real Estate Owned, referring to property acquired by a lender—usually a bank—after a borrower defaults and the property fails to sell at auction. These properties become assets on the lender’s balance sheet. In 2025, a combination of high interest rates, cost-of-living pressures, and shifting lending standards have led to a modest uptick in OREO listings across major Australian cities and some regional centres.

• How it happens: If a homeowner defaults on their mortgage and the lender repossesses the property, it’s usually sold at auction. If it doesn’t sell, the bank takes ownership and classifies it as OREO.
• Where you’ll see it: OREO properties might be listed directly by banks, through real estate agents, or via specialist auction platforms.
• Why it matters: OREO properties are often priced to move, as banks aim to offload them quickly to reduce non-performing assets on their books.

While still a small percentage of the overall market, the number of OREO listings in Australia has grown in 2025, particularly in suburbs with higher mortgage stress and among investment properties impacted by vacancy or rent arrears.

Opportunities (and Pitfalls) for Buyers and Investors

OREO properties present unique opportunities, but they’re not without risks. For buyers with the right strategy, these listings can offer below-market prices, less competition, and the potential for value-adding renovations. However, there are important caveats to consider:

• Discounted prices: Banks are motivated to sell OREO properties quickly, sometimes leading to significant discounts. In 2025, some Sydney and Melbourne OREO homes have sold for 10-15% below comparable listings.
• Limited property information: OREO properties may be sold ‘as is’, with limited history on repairs, maintenance, or past issues. Buyers should budget for extra due diligence and inspections.
• Potential legal complexities: Title issues, unpaid council rates, or tenants in situ can complicate the process. Legal advice and a thorough contract review are crucial.
• Financing challenges: Some lenders are cautious about financing OREO properties, especially if the property requires significant repairs.

For investors, OREO properties can be an entry point into high-demand areas, especially as rental yields remain strong in some Australian cities in 2025. However, rising insurance costs and evolving tenancy laws—like the increased protections for renters introduced in Victoria and NSW this year—should be factored into any investment plan.

2025 Policy Updates and Market Trends Shaping OREO Listings

Several regulatory and market changes in 2025 are impacting the OREO landscape in Australia:

• APRA lending standards: The Australian Prudential Regulation Authority (APRA) has tightened stress testing requirements for new loans, reducing the risk of widespread defaults but also making refinancing tougher for some borrowers. This has contributed to a slow but steady stream of OREO properties in certain postcodes.
• Bank transparency rules: New rules introduced in late 2024 require major banks to publicly disclose their OREO holdings quarterly, giving buyers greater visibility into available stock and regional trends.
• Digitisation of distressed property sales: Online auction platforms and digital conveyancing have streamlined the process for buyers, making it easier to access and transact on OREO properties. In 2025, several big four banks have partnered with proptech firms to list OREO stock directly to the public.
• Tax treatment of OREO sales: The ATO clarified this year that GST may apply to certain OREO property sales (especially new or substantially renovated properties), so buyers should check the contract and seek accounting advice if in doubt.

While OREO remains a niche part of the Australian property market, it’s one that’s gaining attention from savvy buyers and investors. As economic conditions evolve, staying informed about these properties—and the policies shaping them—can give you an edge in a competitive landscape.

Is an OREO Property Right for You?

Whether you’re a first-home buyer looking for a bargain, a seasoned investor hunting for value, or simply curious about the changing face of Australian real estate, OREO properties are worth a closer look in 2025. The key is to approach these opportunities with eyes wide open: do your research, run the numbers, and don’t rush into a deal just because the price tag looks tempting.