The Australian housing market is in a really awkward situation right now — despite the current cooldown, many are still suffering from mortgage stress as homes lose value and costs of borrowing soar.

In a report on, Digital Finance Analytics Principal Martin North said mortgage stress instances across Australia have already surpassed 1 million households – roughly 30.7% of borrowing owner-occupiers.

Mortgage stress is significantly apparent in suburbs with middle-income households. For instance, Sydney suburbs Chipping Norton and Liverpool were found to have the highest mortgage stress level, with 7,732 households not having enough income to cover ongoing costs. The same goes with households in Campbelltown, another Sydney suburb where there are 6,781 stressed owner-occupiers.

Western Australia’s Tapping and its surrounding areas recorded 7,409 households under mortgage stress. Meanwhile, roughly 6,400 households in Toowoomba, Queensland, were also having a hard time meeting their repayments. 

Melbourne suburbs Berwick and Harkaway have the same situation, recording around 5,300 households in mortgage stress.

“As always, it’s worth saying that given flat incomes, and rising costs, and some mortgage-rate rises, the pressure will continue, and falling home prices will make things worse. Many people do not keep a cash flow, so they do not know their financial position,” North said. chief economist Nerida Conisbee shared the same insight. She said homebuyers who needed to borrow more due to high prices have not witnessed their incomes grow at the same pace.

“Those in highly paid jobs or doing business are doing well; they are getting paid bonuses and there are higher levels of business confidence. It does seem to be the middle-income earners that are struggling. A lot of those mid-priced suburbs can be quite expensive; they can be key million-dollar suburbs,” she said.

It is interesting to note that those in the higher end of the income spectrum are also feeling the mortgage stress. In fact, mortgage stress could actually present higher settlement risks to high-income suburbs in Sydney and Melbourne like Hornsby, St Leonards, Bondi, and Port Melbourne. Brisbane’s and Queensland’s Mermaid Beach were also seen with high levels of mortgage stress.

“These high-crane, high-development areas are right in the crosshairs of the current property transition we’re in,” North said.

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