Australian mortgage stress by postcode

Cross-posted from Martin North:

Today we walk through the worst postcodes for mortgage stress and add movement and colour with supporting demographic and financial data.

Yesterday we released the May 2018 mortgage stress and default analysis update. Across Australia, more than 966,000 households are estimated to be now in mortgage stress (last month 963,000). This equates to 30.2% of owner occupied borrowing households.

Our analysis uses the DFA core market model which combines information from our 52,000 household surveys, public data from the RBA, ABS and APRA; and private data from lenders and aggregators. Households are defined as “stressed” when net income (or cash flow) does not cover ongoing costs. Probability of default extends our mortgage stress analysis by overlaying economic indicators such as employment, future wage growth and cpi changes.  Our Core Market Model also examines the potential of portfolio risk of loss in basis point and value terms.

So now we are going to look in more detail, at the most stressed post codes across the country, by counting down to the most stressed area in the country. In each case we will dive into the vital statistics for each location, including population, income mortgage and loan to income ratios, as well as the number of households in stress.


Just outside the top 10 is Victorian post code, 3810, Packenham, with around 4,310 households now in mortgage stress. It is some 54 kms south east of Melbourne. The average home price is around $502,000 compared with $290,000 in 2010. According to the latest census the average age is 32 years and there are more than 12,600 families in the district. The average monthly household income is $5,900, which is below the average in the state as well as nationally. 46% of homes have a mortgage, compared with the Victorian average of 35%. The average monthly mortgage repayment is $1,700, or more than 28% of their average incomes.  But 11% are paying more than 30% of their income each month to service their mortgages.

In tenth place is 3029, another Victorian postcode which includes Hoopers Crossing and Tarneit, around 25 kms from Melbourne CBD. There are about 24,600 households in the district, and the average household income is $6,840 a month. The average mortgage repayment is $1,730 or around 26% of the monthly budget although 12.5% are paying more than 30% of their income on repayments.  More than 80% of the dwellings are separate houses and a further 15% are townhouses. Nearly 51% of all properties in the area are mortgaged compared with the VIC average of 35%. The average home price is currently around $545,000 for a house and $378,500 for a unit, compared with $462,000 and $330,000 a year ago.

Next we go to WA, 6030 which includes Clarkson, Merriawa and Tamala Park, 34 kms north of Perth. There are 4,597 households in mortgage stress in the area, which is home for around 11,000 households.  The average age is 34 years. 86% of the properties here are separate houses, and 14% town houses. 51% of the properties are mortgaged, well above the WA average of 40%. The average income each month is   and the average mortgage repayment is 2,000.  The average proportion of income going on the mortgage is more than 28% but more than 12% have repayments requiring more than 30% of income.

Next in eighth place is yet another Victorian post code 3350, which includes Ballarat and the surrounding area, It’s about 100 kilometres from Melbourne. In this region there are 4,746 households in mortgage stress. The average property value is $315,000, compared with $281,000 in 2010. There are more than 14,500 families in the area and the average age is 37, line ball with the average across the state. The average monthly income is $5,300, well below the national and state averages. Around 33% of households have a mortgage and the average repayment is $1,408 a month, with an average loan to income ratio of 26.5%, though 5% are above 30%.

In Seventh place we go to Queensland 4350, around Drayton and Toowoomba, about 100 kilometres from Brisbane. There are about 27,000 households in the region and the average age is 37. 77% of the properties here are standalone houses, and a further 15% are townhouses. We estimate 5,054 households are in mortgage stress. The average home price is $470,000, compared with $382,000 in 2010. The average income is $5,300 a month. Around 30% have a mortgage and the average mortgage repayment is $1,510 giving an average loan to income of 25%. Just 4% have mortgage commitment above 30% of income.

 Next, sixth is 3037, which includes areas around Delahey, Hillside and Sydenham; around 20 kms north west of Melbourne.  Here around 5,317 households are in mortgage stress. Of the 13,000 households in the district, more than half have a mortgage and the average age is 33. The average home price is around $570,000, up from $365,000 in 2010. 80% of properties are standalone houses and a further 18% are townhouses. The average monthly income is around $7,200 and the average mortgage repayment is $1,730, with an average loan to income of 24%. But 13% require more than 30% of their income to service their mortgage.

In fifth place is another Victorian suburb, 3806, Berwick and Harkaway which is around 40 kilometres south east of Melbourne, with 5,461 households in mortgage stress. The average home price is $700,000 compared with $451,000 in 2010. There are around 13,000 families in the area, with an average age of 36. 88% of the properties in the area are standalone houses. More than 47% of households here have a mortgage and the average repayment is $1,850 compared with the average income of $7,600 making the average loan to income about 24%. However, more than 9% are committed to pay more than 30% of their income each month.

In fourth place we go back to VIC again, to 3805, which includes Narre Warren and Fountain Gate, This area is around 38 kilometres south east of Melbourne. Here 5,900 households are in mortgage stress. The average home price is $620,000 compared with $366,000 in 2010.  There are more than 15,000 families in the area, and the average age is 34 years. The average household income is just over $7,000 a month, which is higher than the national average. 54% of homes are mortgaged and the average monthly repayment is $1,700 slightly below the national average of $1,755. The average loan to income ratio is around 25%, but 12% are paying more than 30% of their income on the mortgage each month.

Coming third we cross the Nullarbor to WA to 6065. This is the area around Wanneroo, including Tapping, Hocking and Landsdale and is located about 25 kilometres north of Perth. It is an area of high population growth and residential construction mainly on smallish lots.  There are more than 6,340 households in mortgage stress in the region. The average home price is $420,000 compared with $529,000 in 2010, and down from a peak of $813,000 in 2014. There are about 17,000 households in the district, with an average age of 33. The average income is $8,300 a month, and 58% have a mortgage with average repayments of $2,170, well above the WA and national averages. The average loan to income ratio is around 26%, but more than 13% are paying over 30% of their incomes on the mortgage each month.

In second spot is the area around Campbelltown in NSW, 2560, which is around 43 kilometres inland from Sydney. Here 6,381 households are in mortgage stress. The average home price is $640,000, up from $320,000 in 2010. Around 20,000 households live in the area with an average age of 34 years. 80% of properties are standalone houses. The average income is $6,100 a month. 37% have a mortgage and the average repayment is higher than the national average at $1,800, or 29% of income. But 13% are paying more than 30% of their income on the mortgage.

So to the post code with the highest count of stressed households, is NSW post code 2170, the area around Liverpool, Warwick Farm and Chipping Norton, which is around 27 kilometres west of Sydney. There are around 27,000 families in the area, with an average age of 34. There are 6,974 households in mortgage stress here. The average home price is $805,000 compared with $385,000 in 2010. 64% of properties are standalone houses, while 22% are flats or apartments. The average income here is $5,950. 36% have a mortgage, which is above the NSW average of 32% and the average repayment is about $2,000 each month, so the average proportion of income paid on the mortgage is more than 33%.

So it’s clear from this analysis that stress is residing among households who are relatively affluent, but highly leveraged, and include a number of newly built high-growth suburbs on the edges of our larger cities. Many are typified by high density standalone houses, or townhouses crammed into small plots. We are seeing a rotation of stress towards some of the Victorian post codes in recent months, but there are concerning rises in both NSW and VIC. However, WA remains the more immediate trouble spot, as can be demonstrated by the higher levels of default there – perhaps close to double the national average.

We will continue to monitor mortgage stress, and will update our core market model next at the end of the year.

As before, I think it is worth repeating that many households in stress do not have a robust household budget, and creating this is an important first step to getting to grips with stress. Whilst putting more on credit cards and refinancing may seem superficially attractive mitigation steps, our analysis shows that these are often only temporary fixes. Getting to grips with where the money is going is an important first step to tackling the problem. Remember too that banks have an obligation to assist in cases of hardship, so if households are in difficulty, they should talk to their lenders, rather than hoping things will work out. Given flat incomes and rising prices, this is unlikely.


  1. That average income – is it before or after tax?!

    Also I hereby coin the phrase “PBNB (Property Bad News Boner) Syndrome”… Our significant others even notice it and start to talk dirty to us:
    – “Darling, I hear that the neighbours across the road dropped 30% under what they bought 2 years ago… and still no interest”
    – … 😳… 🤤
    – (batman voice) I love it when you talk dirty property-prices to me… my one weakness: the lower they go, the harder I get(/batman voice)
    – Darling, I also heard they’re under-water with their loan…
    – … 🤤… 🤤

  2. That phrase highly leveraged is the key…. a couple of investors are dumping some houses here this week…….15% off. The rest of the sellers are trying to hold the line at 5% off from last year but no sale. We will see if the distressed sellers move the market soon

      • BubbleyMEMBER

        Talking to a friend here who is moving out of her rental in 4 weeks time… the investor is going to sell and wants it empty to do so.

        It will be interesting to see what happens with this one. It is the height of the selling season here and heavily discounted properties are moving.

  3. Jumping jack flash

    The important thing is the stagnant incomes and the constantly increasing cost of living.

    Both of these things are caused by the insane amounts of debt everyone has.
    Only after the debt is repaid will wage inflation return and costs of living mediate.

    This of course excludes any wage stimulus or additional controls around costs of living increases which I believe may happen soon to help the banks survive the credit crunch without needing to raise interest rates which would destroy everything.

    Ironically, without the unfathomable debt, wages needn’t be so high, and therefore costs of living needn’t be so high either – the gouging could end. Global competitiveness could return and we could actually turn this place around and start being productive instead of focusing all our efforts on effectively trying to get a free lunch using someone else’s credit card.


      Australia’s second richest person, Harry Triguboff, has warned bank lending is tightening in response to the royal commission, hurting the property market at a vulnerable time as he hit out at focusing on borrower expenses when determining mortgage approvals.

      Mr Triguboff, the billionaire property developer behind the Meriton apartment empire, says the banks “are being shell shocked in the way they are being attacked” and the impact to lending “affects all of us”.

      “There is nothing wrong with our banks, I promise you,” Mr Triguboff told The Australian Financial Review. “I assure you they make mistakes, so do we all. But there is nothing wrong with them. They are shell shocked and if affects all of us.”

      Soooo…. we’re OK! Tribufoff said so!

      Triffuffoff also says:

      “If she (borrower) has to find more money, she’ll spend less. What, she must spend that much (each month)?

      “It’s not that all of it goes on food. She also spends on stupid things too. If she needs more money she will spend less on other things, if she has to.”

      In other words – screw everyone else – just buy my dogboxes-in-the-sky! Also – what’s wrong with 35 years of a steady diet of cup-o-noodles?

    • Just have to set the permanent immigration program to zero net overseas migration, then after a shock, things will begin to get better.
      We have to somehow prise the traitors hands off the immigration control levers.

  4. I’m not really sure that raw numbers by post code analysis is all that useful.
    3810 is ~152sqkm
    3029 is ~17sqkm
    3806 is ~17sqkm
    3350 is ~91sqkm
    3037 is ~90sqkm
    3805 is ~32sqkm

    To put that in perspective, 3182, St Kilda is only ~3.6sqkm

    It seems that the seeming policy change in Auspost to not reduce postal area size as it becomes inhabited will always artificially weight these larger areas to the top of the stats – even if their overall percentage is on par with smaller areas.

      • Doubt it.

        You’d have to figure out how many properties exist in the post codes (which is hilariously difficult if you’ve ever seen the data) and figure out the percentages.

      • population divided by average household size should give a good indicator for how many households per suburb if you want that

    • It’s obvious what happens with the rate rises, that’s why they aren’t coming in any significant amount.

    • reusachtigeMEMBER

      LOLOLOLOL! You’re in the wrong place. Don’t you know anything? Only Lower teh interest rates will fix thing.

  5. Imagine being in mortgage stress in one of those far flung suburbs. You and the missus thought you could cope with driving into work every day and that was the only area you could afford to buy a house to start a family in. Then maybe a baby comes, one income gone. Electricity goes up, petrol goes up, rates go up and on and on it goes. A gutpunch every month as another cost of living increases. Doesn’t sound like much fun. Where did we go so wrong. The entire place has been hoodwinked by spivs.

    • Super Phoenix

      “Doesn’t sound like much fun”

      They just need to find a way to have some fun with the situation because the situation will continue for a long time.

    • That’s exactly how I think about this, I kept thinking of what was being asked of me to join the good looking Reusa type crowd and I just thought, I don’t want to deal with 30 years of that scenario, in fairness more like 10-12 (if Ireland is any kind of template), but still… you know what I mean? I recall watching a co-worker of mine come into work in Ireland each day, he looked totally destroyed. He was only in negative equity 80,000 euro, but at the time I was like 80,000 euro wow! He’s doing ok now as he just HODL but he had a secure job (not that he enjoyed it) and managed to get through it.

      • Super Phoenix

        Negative equity mate!!

        10-12 years is still a long time to endure for ordinary folks, especially those with young kids. Think of what a “totally destroyed” father for 10-12 years will do to them.

        EUR 80k is about AUD 120k. I can see many locals will not make it.

      • Yeah it was a good kick in the guts for him, and it was only an apartment (so smaller purchase) in the Inner city area. He didn’t have the debt levels folks here do! He did buy late cycle, but that disheveled look and bags under the eyes with stress etc.. I’d see it each day and think god, I am glad that’s not me!

      • And to think how much longer the party has gone on here too. I feel for people that are in OO mortgage stress for no fault of their own, but I seriously want to see the multi IP owning smug f*cks wiped out. Needs to be a big dose of medicine to wipe out this disease.

    • Quem Iuppiter vult perdere, dementat prius (Whom the gods would destroy they first make mad)

    • LOL. Bitcoin’s currently at $7700 USD and it doesn’t look like it’s about to start climbing anytime soon. You’d have to have a heart of stone not to laugh at that clown. 🙂

      • You’re absolutely correct, Gav. One must seriously question a system that allows people like that to operate as financial advisers. Litigation vulchers are circling though.

    • He’s basically buying lottery tickets now.

      On that note, anyone got a view on buying Tabcorp shares to profit from the number of people throwing it all on a last ditch gamble to break free? I mean the economics of it, not the ethics…

      • Pretty sure it’s a known phenomenon that people in desperation stage will spend the last sheckles on scratchies, lotto etc. So yes, may be worth a punt with play money. Booze sellers also.

    • Philly SlimMEMBER

      looks like he is been dabbling in it for a while. property and bitcoin – this guy loves a punt!

  6. Is this correct or a typo?

    The area around Wanneroo (WA)… average home price is $420,000 compared with $529,000 in 2010, and down from a peak of $813,000 in 2014

    Was the peak over $810K in 2014? That is a nearly 50% drop, if its accurate, that is crazy.

    • I don’t think it got that high, especially around that area. I was scratching my head at that one too.

    • Super Phoenix

      “if its accurate, that is crazy.”

      A case of Martin North bear porn gone too far?

      But 50% drop in 4 years is not crazy – after all, it is not unprecedented.

    • macrofishMEMBER

      Wanneroo is a strange suburb its got a lot of smaller/standard suburban blocks (600-700sqm) and a number of a acre blocks in the same post code.

      • Could explain it. Only need a shift in which type of property was selling at a point in time. Maybe at peak mania all those acre places were sold to developers to become 350sqm dogbox blocks. Certainly not a normal set of numbers for that suburb. It’s not the best of areas…

  7. Super Phoenix

    “We are seeing a rotation of stress towards some of the Victorian post codes in recent months,”

    Hmmm. What does “a rotation of stress” actually mean?

      • Super Phoenix

        I meant; was he saying the stress disappeared in the old place as it spread to new places?

    • Could be one of those “there is stress now where stress wasn’t before” (additive instead of exclusive-or)

    • BubbleyMEMBER

      “a rotation of stress”

      Might be IO loans resetting or maybe there was a really smooth investment property spruiker moving through the area, suburb by suburb and now its all starting to fall apart.

      Or contagion?

    • – I think it means that some postcodes fell out of the top 10 in say March and then re-surface/re-appear in the same top 10 in e.g. the month of May.