Mortgage stress and negative equity pressure young Australians
Cotality’s daily dwelling values index shows that dwelling values have declined by 5.3% from their 10 April peak across the five major capitals, led by Sydney (-7.7%) and Melbourne (-6.9%): New analysis from Cotality shows that one in two homes purchased in Sydney and Melbourne in the past 12 months now sell for less than their The post Mortgage stress and negative equity pressure young…
Cotality's latest data reveals that dwelling values have dropped 5.3% since their April peak in Australia's five biggest cities, with Sydney and Melbourne bearing the brunt of the decline (-7.7% and -6.9% respectively). A startling trend emerges as one in two homes bought in Sydney and Melbourne within the last year now sell for less than their purchase price, a figure that rises to one in three nationally since August 2025.
Nationally, 10.9% of Sydney homes purchased in the past year have lost between 5% and 10% of their value, with 4.7% suffering greater losses. Melbourne's numbers are equally grim, with 8.9% of recent purchases experiencing similar value declines, with 3.5% facing deeper losses. Experts predict a 13% peak-to-trough drop in home values across the capital cities, with HSBC, CBA, and Macquarie Bank all forecasting similar declines.
First-time homebuyers who took advantage of the 5% deposit Home Guarantee Scheme are particularly vulnerable. Property analyst Cameron Kusher criticized the government's actions, stating, "You've encouraged first-home buyers into the market, then made tax changes which weakened it." The situation worsens with mortgage stress hitting the highest level since the Global Financial Crisis in 2008.
With interest rates expected to rise further and the burden of mortgage repayments at a 15-year high, first-time buyers find themselves in a precarious position, trapped in mortgages where the costs exceed the value of their homes.
Aussie Home Loans CEO Sebastian Watkins warns that many of these buyers face a "mortgage prison," unable to refinance to cheaper rates. "The mortgage costs more than the house is worth. That's a terrible outcome for first-home buyers," he asserts, "They're now locked into that mortgage… they can't even take advantage of the cheaper rates." The combined effects of falling prices, higher rates, and unfavorable tax changes have left a significant number of recent buyers trapped in unsustainable mortgage situations.
Written by urgent.news from MacroBusiness's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
