Brokers are being urged to look past reassuring headline numbers as new Domain data shows distressed listings near record lows, even while pressure builds on borrowers’ budgets and borrowing capacity.
With mortgage rates higher, savings buffers thinning, and sentiment slumping, the risk profile for first-home buyers and more highly leveraged property investors is changing fast.
Domain figures released in February show distressed listings account for less than 2% of properties for sale in most capital cities, with Brisbane the outlier at 3.4%. In Sydney, the proportion is 2%, while Melbourne sits at 1.1%, underscoring that forced sales remain rare despite multiple mortgage rate hikes.
Economists caution, however, that distressed listing data typically lags reality by 12 to 24 months, and that this cycle is starting from a more fragile base than the last.
SQM Research reports distressed listings were broadly stable in March, up just 0.3% to 3,512 properties and still 29.3% lower year-on-year, although Western Australia recorded a 13.9% monthly rise and the ACT remains elevated on an annual basis.
Unemployment has already edged up to 4.3%, consumer confidence has slumped to record lows after the cash rate moved to 4.1%, and cost-of-living pressures continue to erode household cash flow.
A recent Roy Morgan analysis underscores how widespread that strain has become, estimating that 24.9% of mortgage holders – about 1.32 million people – were “at risk” of mortgage stress in February 2026, and modelling that this could rise to 30.3%, or around 1.6 million borrowers, if the Reserve Bank lifts rates again by May.
AMP chief economist Shane Oliver notes that the first signs of strain are behavioural, not yet visible in arrears or forced sales. Brokers are reporting more clients switching to fixed mortgage rates, extending loan terms and actively restructuring debt to preserve serviceability.
Domain chief of research and economics Nicola Powell (pictured) said the average mortgage holder still appears relatively well positioned, but household budgets are tightening.
“I think Australians are tightening and trying to be as resilient as they can,” Powell said.
She added that “households are in that adjustment phase, and we’re not in the distressed phase yet”. Powell said a sustained rise in unemployment and the exhaustion of savings buffers would be needed before arrears meaningfully lift.
On the ground, some brokers are already seeing clear warning signs.
Sydney broker Rebecca Jarrett-Dalton of Two Red Shoes said: “We’re not seeing distressed sales yet, but our phone is running hot with people wanting to get ahead of the rate rises and fix their mortgage rate,” noting more clients stretching back to 30‑year terms and relying on modest savings buffers of $10,000 to $20,000.
Jarrett-Dalton reports clients cutting discretionary spending, and in some cases insurance, to keep up with repayments.
For brokers, the combination of still‑tight listings, fragile confidence, and rising refinancing demand points to a crucial advisory role: helping first-home buyers and investors stress‑test repayments, protect buffers, and prepare for a softer, but more volatile, housing market in 2026.
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