Under pressure: where interest rate rises are starting to bite
It’s a tale of two residential rings as some parts of the country’s capitals bear the brunt
2 min
There’s no end in sight for mortgage holder pain, with some parts of the country set for a worse time than others, new analysis suggests.
While economists from the major banks are predicting rates to rise at least another 25 basis points from the current level of 4.1 percent to 4.35 percent, data from CoreLogic reveals it’s the outer suburbs of the country’s capitals most likely to feel the pressure.
Head of research at CoreLogic, Eliza Owen, said repayments on a $750,000 loan have risen by about $1,550 per month since rate hikes began in May 2022, forcing many households to dig deep.
“Households in some regions will feel the pinch more than others,” Ms Owen said.
“The number of mortgaged, owner occupier households are generally highest in outer regions of major cities, particularly Melbourne.
“Looking at SA3 regional boundaries at the time of the 2021 Census, the highest number of mortgaged owner occupiers were in Wyndham (43,807, or around 48 percent of households), Casey –South (38,614, or 56.2 percent of households), and Wanneroo in Perth (38,320, or 54 percent of households).”
Adding further pressure on the ability of mortgage holders in those areas to service their loans, 16 of the 25 regions identified had a weekly median income lower than that of their greater capital city.
Ms Owen noted that Blacktown – North has seen a steady rise in the number of listings in the past four weeks, while the amount of time on the market has been increasing since February. This points to more available properties on the market and greater uncertainty amongst would-be buyers.
Other parts of the market, such as mining towns and inner city areas where there are fewer owner occupier mortgages, may also be under stress, Ms Owen said. Capital gains in some areas have also clouded the impact of higher interest rates on investment mortgage holders.
“It is noticeable that new listings volumes are climbing in some of these markets, where the national trend is seeing a seasonal slowdown,” she said. “This could make it more difficult for recent buyers to make a capital gain if they are struggling to meet mortgage repayments.”
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New research shows a widening divide across Australia and New Zealand’s property markets, with investors increasingly forced to look beyond traditional strongholds to find real returns.
3 min
By any traditional measure, Australia’s property market should be moving in sync. Instead, it is fragmenting.
New research from MaxCap, led by Head of Research Bruce Wan, paints a picture of a market no longer defined by national trends, but by sharp regional divergence, where performance gaps between cities are widening, and the smartest capital is moving accordingly.
At the top end of the ladder, Perth and southeast Queensland are surging ahead. At the other, Melbourne and Auckland are only just beginning to recover from recent downturns. And sitting squarely in the middle is Sydney, steady but constrained.
The takeaway is clear: the era of relying on headline markets is over.
The rise of the unexpected leaders
Brisbane and the broader southeast Queensland region have emerged as standout performers, driven by population growth, infrastructure investment and a sustained undersupply of housing.
According to the report, housing values in the region have continued to accelerate, supported by long-term tailwinds including the 2032 Olympic Games and a decade of relatively subdued price growth prior.
Perth is telling a similar story, albeit for different reasons. Once heavily tied to commodity cycles, the Western Australian capital is now benefiting from a broader base of economic drivers, including defence spending and sustained resource sector strength.
The result is a housing market that remains one of the strongest in the country, even as price growth begins to ease from its peak.
Sydney holds, but doesn’t lead
For Sydney, the story is more nuanced.
While prices continue to climb and the city remains Australia’s most expensive market, affordability constraints are clearly limiting its pace. Residential growth, while positive, lags behind smaller capitals, and commercial sectors are being held back by softer demand in key industries.
There are, however, signs of momentum building. New infrastructure, including the western Sydney Airport and expanded rail networks, is expected to unlock development opportunities and support future growth, particularly in emerging precincts.
Still, the report positions Sydney firmly in the “middle of the pack”, no longer the automatic frontrunner for investors.
Melbourne’s slow reset
Melbourne, once a consistent performer, has spent recent years recalibrating.
Extended lockdowns, combined with new state property taxes, have weighed heavily on investor sentiment and pricing, particularly across the commercial office sector. Residential values have also underperformed, though for different structural reasons.
Now, there are early signs of recovery.
Improved affordability, population growth and a stabilising economic backdrop are beginning to draw buyers back into the market, with both residential and commercial sectors showing tentative signs of improvement.
Auckland’s turning point
Across the Tasman, Auckland has faced its own challenges, particularly from an outflow of younger workers to Australia, which has dampened demand and stalled price growth.
But here too, the tide appears to be shifting.
A return to positive migration, lower interest rates and policy changes — including the easing of foreign buyer restrictions — are expected to support a gradual recovery, alongside renewed interest from offshore capital.
A market that rewards precision
If there is one unifying theme, it is this: broad-brush strategies no longer work.
MaxCap’s research highlights that the most compelling opportunities are increasingly found outside the traditional powerhouses of Sydney and Melbourne, requiring investors to take a more targeted, locally informed approach.
“Given these persistent performance gaps, there is plentiful scope for alpha returns, just by picking the right locations and market segments,” the report notes.
In other words, success in this market is no longer about being in property — it is about being in the right property, in the right place, at the right time.
And increasingly, that place may not be where you expect.
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