Sydney suburbs where mortgage debts got wiped out
The majority of homeowners in an array of Sydney suburbs no longer have mortgage debt but their stroke of luck is set to create a problem.
Many of Sydney’s most coveted suburbs have become mortgage-free zones where homeowners are sitting on a gold mine of fully paid off real estate – and it’s spurred a growing divide across the housing market.
Suburbs where the majority of homeowners resided in properties without mortgages included northern beaches enclaves Bayview, Elanora Heights, Avalon and Palm Beach, along with Sutherland Shire suburbs Illawong and Alfords Point.
Other areas where homeowners were more likely to own their properties outright were north shore suburbs Castle Cove, Northbridge, Mosman, Hunters Hill, Woolwich and Turramurra, new SuburbTrends data revealed.
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Additional areas with a higher than average concentration of unencumbered property wealth were mostly spread across the eastern suburbs, inner west and coastal pockets of the Sutherland Shire.
Homeowners’ collective unencumbered property wealth in many of these suburbs was over $5 billion, largely insulating these owners from the forces plaguing the rest of the market such as higher interest rates.
Residents living in fully paid off properties was less common in Western Sydney, with just 7 per cent of homeowners mortgage free in Parramatta North and 8 per cent in Oran Park – the lowest proportion in Sydney.
Experts revealed the mismatch in debt levels was exacerbating generational wealth inequalities and creating ripple effects for first homebuyers.
It has meant many of the lower debt suburbs have become fortress-like markets where it’s difficult for new entrants to get in because owners rarely sell – and the prices have skyrocketed as a result.
SuburbTrends analyst Kent Lardner said fewer homeowners in debt was beneficial for the market as a whole there was a downside to having areas with a particularly high concentration of mortgage-free homes.
“High mortgage-free homeownership can lock younger buyers out of the market by reducing housing turnover, keeping supply low, and increasing competition,” Mr Lardner said.
“First-home buyers struggle to compete with downsizers and cash-rich buyers, who often outbid those needing finance. In some areas, high outright ownership translates to fewer new listings, forcing younger buyers to seek alternative locations or property types.”
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Sydney’s staggering trove of unencumbered property wealth was one of the reasons prices continued to soar across Sydney over 2023 and most of 2024 – despite a barrage of 13 interest rate hikes.
It has also served as a springboard for continued price rises as some of the equity in these suburbs was often being channelled into home deposits for the homeowners’ adult children.
“Intergenerational wealth is now one of the biggest factors in determining homeownership, especially in high-equity suburbs,” Mr Lardner said.
“Buyers without family financial support face longer rental periods, higher mortgage debt, and greater financial pressure.
“Without property wealth to pass down, younger generations may struggle to enter the market at all, increasing the divide between those who inherit property wealth and those who remain locked out.”
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Jim Hunter, director of developer Capital Corporation, said one of the reasons long-time homeowners rarely sell their properties – even if they have become surplus to their needs – is a lack of adequate stock to move into.
“Downsizers usually want something smaller but they don’t want to downgrade,” he said.
“We find you have to offer a product with plenty of open space. The kitchens have to be big, there has to be security. Downsizers don’t want to move into pokey apartments. There has to be a lifestyle offering.”
Peter and Corinne Collins live in a fully paid off Wahroonga home, but with three levels, the maintenance was more than they would have liked. They’ve struggled to find a suitable alternative.
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They recently snapped up a home in The Residences in Wahroonga after a long search, but Ms Collins added they wouldn’t have bought it unless it was “perfect”.
“(Looking) was a long-term thing,” she said. “We had to wait for the right property to come along … we weren’t interested in a small apartment. Having an extra room was important and we wanted a bush outlook.”
SUBURBS WITH MOST MORTGAGE-FREE HOMEOWNERS
| Region | Percentage Owned Outright (private dwellings) | Unencumbered property wealth (estimate) |
| Horsley Park - Kemps Creek | 58% | $2.09b |
| Bayview - Elanora Heights | 53% | $4.09b |
| St Johns Park - Wakeley | 53% | $1.09b |
| Blackheath - Megalong Valley | 52% | $994m |
| Galston - Laughtondale | 51% | $2.09b |
| Castle Cove - Northbridge | 51% | $5.09b |
| Avalon - Palm Beach | 51% | $5.09b |
| Illawong - Alfords Point | 51% | $2.09b |
| Wentworth Falls | 51% | $1.09b |
| Glenhaven | 51% | $1.09b |
| Terrey Hills - Duffys Forest | 50% | $1.09b |
| Lilli Pilli - Port Hacking - Dolans Bay | 49% | $1.09b |
| Caringbah South | 49% | $4.09b |
| Putney | 49% | $2.09b |
Source: SuburbTrends
Originally published as Sydney suburbs where mortgage debts got wiped out