Postcodes in Victoria which owe more than $1.4m in average debt per household include Pakenham, Melbourne, Aspendale, Brighton and Melton.
Victorians’ shocking $306,000 average debt has been revealed amid concerns a rate hike could worsen the state’s landlord exodus, break up relationships and spur mental health issues.
With the Reserve Bank set to meet for the first time this year on Tuesday, experts are worried even a small rate rise could be “disastrous” for young families and first-time buyers on Melbourne’s fringes, as well as investors and their tenants.
The Digital Finance Analytics (DFA) data shows the typical $306,548 Victorian debt includes an average $147,907 on their mortgage, $128,142 in investment property-related debt and $23,416 in other consumer loans.
RELATED: Rental instability worsens Australia’s housing shortage despite profits
How Melbourne’s gender pay gap fuels women’s housing crisis
RBA rates bombshell in data released today
DFA director Martin North said the research company conducted surveys of Australian households on topics such as average outstanding debts related to mortgages, credit cards, loans and other information.
From these figures, DFA estimates financial stress down to individual postcodes.
Mr North noted the data took into account all homeowners including those who have little remaining debt.
In contrast, he said that even small rate rises from the RBA “will be disastrous and potentially a tipping point” for households spending more money than they were bringing in.
Mortgage holders most at risk from a rate increase include first-time buyers who have borrowed a significant amount to purchase on the city’s urban fringe or in high-rises, plus young growing families, he added.
Digital Financial Analytics director Martin North says Australia needs to adopt better education about the true costs of debt. Picture: Hollie Adams.
PropTrack figures show Greater Melbourne’s median house price hit $1.012m in the 12 months to December 2025. Picture: Sarah Matray.
“I believe Australians are too easy in incurring debts and many appear to see it as just the normal way to manage their affairs,” Mr North said.
“Debt counsellors will highlight that debt problems can lead to relationship breakdowns and mental health issues.”
He said better education on the true costs of debt was needed especially for younger generations.
Mr North urged people with debt issues to seek help from sources such as the not-for-profit
National Debt Helpline.
This Pakenham house is for sale with a $750,000-$820,000 range. Households in the suburb, which has a $695,000 median house price, owe an average $1.85m in debt.
Property Investors Council of Australia chair Ben Kingsley says that about 92 per cent of Victorian rental properties are provided by private property investors.
Victorian postcodes with the largest average debts included the Pakenham, Melbourne, Mordialloc and Brighton postcodes with $1.4m-plus debt per borrowing household.
Mr North said lower-socio economic areas ranked alongside wealthier postcodes for several reasons including that home buyers in more affordable regions were often first-time purchasers with bigger loans.
He noted they could also be dealing with multiple debts due to the high use of multiple bank cards and buy now pay later systems, less financial assistance from their parents, and limited assets and cash flow.
Households in 25 Victorian postcodes owe an average of more than $1m in debt, according to the DFA data. Picture: NewsWire/David Crosling.
Property Investors Council of Australia chair Ben Kingsley said that as the Victorian government forged ahead with its 150-plus rental law reforms, many landlords had sold their properties due to the higher cost of maintaining homes under the new legislation.
Mr Kingsley said a rate rise putting rental providers under even more financial pressure would not be good news for the state’s rental crisis.
“With the ever-increasing compliance and insurance tax costs of running a property in Victoria, an increase in interest rates will certainly have a lot of investors doing their numbers to see whether there’s an appropriate return on investment if their interest costs start going up,” he said.
All big four banks anticipate the Australian cash rate will be lifted to 3.85 per cent when the RBA meets next week. Picture: NCA NewsWire/Christian Gilles.
The latest Homes Victoria Rental Report shows there were 655,626 active rental bonds in Victoria as of June 2025, a drop of 10,274 since June 2024, reflecting a loss of thousands of properties for tenants.
Mr Kingsley said it was important for the state government to find a balance between holding properties up to a high standard and protecting renters while addressing Victoria’s “anti-investor” policy and tax settings.
Buxton Bentleigh director Simon Pintado said in the past two to three years, his area had experienced a “mass exit of investors”.
But the past six months had seen a spike in interstate- and overseas-based investors looking to buy.
This Northcote house is on the market with a $1.65m-$1.75m range. The suburb has a median $1.73m house price and is among Victorian’s most debt-heavy areas.
Mr Pintado said while some buyers would not be affected by interest rate rises, such as those who have paid off their mortgage, others would see their borrowing capacity impacted.
“Generally, in my experience, in the last 17-odd years, and there hasn’t been a crazy amount of rate movement,” he said.
“But when the rates do go up, people are just a little bit more hesitant, a little bit more gun shy, so to speak – they don’t want to necessarily overpay or pull the trigger on the next purchase in the fear of uncertainty from the RBA.”
In Beaumaris, this house is for sale with $2.19m-$2.39 price hopes. The suburb’s typical house price is $2.05m and its households owe an average $1.34m in debt.
VIC’S MOST DEBT-RIDDEN AREAS
Postcode |
Average total debt per borrowing household |
| Pakenham, Pakenham South, Pakenham Upper | $1,852,698 |
| Melbourne | $1,831,121 |
| Mordialloc, Aspendale, Aspendale Gardens, Braeside | $1,702,073 |
| Brighton | $1,499,808 |
| Beaumaris, Black Rock | $1,339,345 |
| Warrnambool, Dennington | $1,337,728 |
| Harkness, Melton, Melton West, Kurunjang | $1,275,632 |
| Croydon, Croydon Hills, Croydon North, Croydon South | $1,199,725 |
| Northcote | $1,190,612 |
| Oakleigh, Oakleigh East, Hughesdale, Huntingdale | $1,185,785 |
Source: Digital Financial Analytics.
Data is only for borrowing households and captures mortgage, investment property, card balance, buy now pay later, car, boat and personal spending loans, and other consumer loans.
Additional reporting by Aidan Devine.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Melbourne house prices tipped to rise 14pc | KPMG
English (US) · 