Maps: Where mortgage stress is worst in Australian capital cities

(Photo: Digital Finance Analytics, Getty)

Australia’s household debt level is the fourth highest in the world, according to Finder.com.au.

In fact, as a percentage of net income, we owe an eye-watering 212 per cent in household debt.

It’s no wonder that such high levels are contributing to a growing number of households also suffering from mortgage stress. According to Digital Finance Analytics (DFA), more than 1 million households – or 31 per cent of owner occupied households – across Australia struggle with mortgage stress.

What’s mortgage stress?

Households are considered ‘stressed’ when net income, or cash flow, doesn’t cover ongoing costs. Households with mild stress don’t have much leeway when it comes to cash flows, and those in severe stress aren’t able to meet repayments with their current income, North explained.

Either way, the impact isn’t pretty. “In both cases, households manage this deficit by cutting back on spending, putting more on credit cards and seeking to refinance, restructure or sell their home. Those in severe stress are more likely to be seeking hardship assistance and are often forced to sell.”

But not all cities are made the same, and some capital cities are under greater mortgage stress than others.

Unsurprisingly, Sydney and Melbourne top the list thanks to their massive populations but also because of house prices that are “too high” and mortgages that are “too big, thanks to poor lending”, DFA principal Martin North told Yahoo Finance.

However, they’re not the only ones: households in Western Australia and Queensland are also under pressure thanks to higher rates of unemployment, lower wages and stagnant home prices.

“Flat income and rising costs – such as child care, electricity, etc – also hit home,” North added.

Where are the areas of mortgage stress?

“Main areas of stress are in the newer built suburbs on the urban fringe where prices rose recently, and people bought new, on small plots,” North told Yahoo Finance.

“Now prices are falling, and also higher travel costs to get to work etc. are hitting.”

But it doesn’t mean that more affluent households are escaping bite, either, given the hefty size of their mortgages. Furthermore, many moving into part-time work or retirement still have to repay their mortgage.

According to Digital Finance Analytics, here’s where mortgage stress hits hardest throughout Australia’s capital cities:

Sydney

Top 5 NSW postcodes with the most mortgage stress:

1. 2560 (Leumeah)

2. 2170 (Chipping Norton)

3. 2567 (Mount Annan)

4. 2340 (South Tamworth)

5. 2768 (Stanhope Gardens)

Melbourne

Top 5 Victorian postcodes with the most mortgage stress:

1. 3805 (Narre Warren South)

2. 3806 (Berwick)

3. 3350 (Ballarat East)

4. 3810 (Pakenham)

5. 3037 (Sydenham)

Adelaide

Top 5 SA postcodes with the most mortgage stress:

1. 5108 (Paralowie)

2. 5114 (Yattalunga)

3. 5162 (Morphett Vale)

4. 5109 (Salisbury East)

5. 5118 (Gawler East)

Brisbane

Top 5 QLD postcodes with the most mortgage stress:

1. 4350 (Harristown)

2. 4034 (Geebung)

3. 4152 (Camp Hill)

4. 4740 (Mount Pleasant)

5. 4305 (Basin Pocket)

Perth

Top 5 NSW WA with the most mortgage stress:

1. 6065 (Tapping)

2. 6164 (Success)

3. 6030 (Merriwa)

4. 6069 (Ellenbrook)

5. 6018 (Innaloo)

ACT

Top 5 ACT postcodes with the most mortgage stress:

1. 2914 (Amaroo)

2. 2611 (Weston)

3. 2902 (Kambah)

4. 2615 (Latham)

5. 2913 (Ngunnawal)

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