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Doman’s latest First Home Buyer Report has found that all capital cities excluding Darwin contain borrowers under mortgage stress, where mortgage stress is defined as occurring when repayments exceed more than 30 per cent of household income.
According to Domain, the only two cities that had mortgage stress for entry-priced houses were Sydney and Melbourne in 2019, while no cities experienced mortgage stress for units that same year.
However, mortgage stress for units can be seen in Sydney, Brisbane, and Adelaide as of 2025.
On a national basis, mortgage repayments as a percentage of income for entry-priced houses in the capitals have risen 47.1 per cent of household income today, up from 46 per cent a year ago and 28.2 per cent five years ago, while units require 30.7 per cent of household income.
Sydney currently stands as the top capital city for mortgage stress, with 57.6 per cent of income required for houses and 35.8 per cent for units. This is followed by Canberra (46.7 per cent for houses), Brisbane (46.4 per cent), and Adelaide (45.9 per cent).
However, the situation is less dire for entry-priced units overall, with five of the eight capitals sitting below the 30 per cent threshold.
Darwin currently has the most affordable units across the capitals, only requiring 17 per cent of household income, followed by Perth (23.7 per cent), Canberra (26.5 per cent), Melbourne (27.5 per cent), and Hobart (29.1 per cent).
Meanwhile, the country’s regional areas are markedly more affordable, with 33 per cent of income required to service a mortgage for entry-priced houses and 25.9 per cent for units.
Dr Nicola Powell, Domain’s chief of research and economics, said that property prices are not the only measure of housing affordability among first home buyers as mortgage serviceability also plays a crucial role in home ownership.
“While property prices are high and debt levels are large, the recent drop in mortgage rates offers some relief. However, rates are still high compared to recent years, especially with those rising levels of debt,” Powell said.
“The aggressive rate hikes in 2022 and 2023 took a huge toll on mortgage serviceability, while soaring property prices over the past 5 years have pushed household debt to new highs.
“Today, the proportion of income needed for an entry-priced house across the combined capitals is 19 percentage points higher than 5 years ago, with units rising by about 8 percentage points.”
This emerging trend has demonstrated how rising interest rates and property prices have compounded and worked to push households into larger mortgage repayments, according to Powell.
“Mortgage stress varies, by geography, with some cities, particularly for entry-level units, seeing improvements. The broader property market slowdown, easing prices and cash rate cuts points to gradual relief,” Powell said.
“However, lower cash rates can also boost borrowing power, potentially pushing prices up, especially with more rate cuts on the horizon Ongoing challenges like housing undersupply remain, making it crucial to ensure adequate, affordable, and sustainable housing into the future.”
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