It started in the west, but the mortgage stress that has crippled thousands of families there has now hit Sydney's wealthy Eastern Suburbs.
Dubbed the "affluent stressed'', eastern suburbs residents typically spend 38 per cent of their household income on mortgage repayments, have credit-card debts of between $8000 and $20,000, pay private-school fees and are more exposed to the volatile sharemarket.
They're on good money, but many have borrowed huge sums to buy into the most expensive real-estate market in Sydney and are now facing the prospect of a nightmare in 2008 as rates continue to rise.
In October, Fujitsu Consulting found 2.5 per cent of eastern suburbs families were in some degree of mortgage stress; now it's 6.5 per cent.
And a small group are in "severe stress'' and are trying to sell or refinance or are in receipt of foreclosure notifications, according to Fujitsu Australia managing consulting director Martin North.
"While people have more affluent lifestyles and incomes, the fact is you can't squeeze a lemon indefinitely,'' Mr North said.
The number of properties being offered for sale has increased dramatically this month, due in part to seasonal factors, the timing of Easter and a growing sense of "get out while you can''.
"There's a strong theme coming through to say, 'Well, we expected to be able to live in this nice suburb; however, it's probably easier to now move to a different suburb (and) reduce the mortgage exposure because the stress we're under is just too great and we don't think we can afford to ride the next couple of interest-rate rises,''' Mr North said.
"It started in the west; it's spilling over to the east.
"It's not as severe yet, but it's hitting people that you would not have expected.''
Australian Property Monitors general manager Michael McNamara said the east was experiencing fire sales, but mortgage stress was masked by general affluence and capital growth.
"Anecdotally, the forced sales, the distressed sales in the city and east are mostly Generation X-ers who stretched themselves a bit too far at the height of the boom and have decided it's a good time to move else- where and downsize,'' he said.
"Some of the younger mortgage holders in the city and east are definitely starting to feel the pinch of higher interest rates.''
Mr McNamara said those who extended themselves to buy into the east three or four years ago and fixed their rates for three years were now facing an extra $800 or $900 a month in repayments on a $500,000 loan because of recent rate rises.
"Mortgage holders in the seat of Wentworth (in Sydney's east) on average are paying 38 per cent of their disposable household income in servicing their mortgages,'' he said.
Rod Cornish, head of property research at Macquarie Bank, said the east had a varied demographic with many older residents who had finished paying off their mortgage.
He said the east was more immune to mortgage pain than the rest of Sydney because of high incomes but, if the labour market were to change, the east would suffer.
And volatile financial markets were likely to have an impact on the top end of the property market in the east.
"It's going to be a little less frothy because the bonuses are likely to be reduced this year and also you've got some margin calls occurring,'' Mr Cornish said.
Mr North said: "Six months ago, they were expecting big bonuses. Suddenly, those big bonuses have evaporated.
"And they were relying on those to effectively make their next payments.''
Raine & Horne Double Bay principal Michael Pallier said finance-sector workers looking to buy property had slashed their budgets by as much as $500,000 because of reduced bonuses and share market uncertainty.
"A lot of young people really put themselves in high debt to buy in the eastern suburbs,'' Mr Pallier said.
Housing Industry Association executive director NSW Graham Wolfe said rental stress was no longer limited to Sydney's outer suburbs, with pockets of the east sharing the pain.
"Some people have committed an awful lot of their household income to paying mortgages for very large housing loans so they can live in a very exclusive area near exclusive schools, but there comes a time, particularly when they have extended themselves, to re-evaluate,'' Mr Wolfe said.
According to the 2006 Census, the proportion of mortgage holders with annual repayments of more than $48,000 was 55 per cent in Point Piper, with the figure at 47 per cent in Watsons Bay, 36 per cent in Vaucluse and Darling Point, and 33 per cent in Bellevue Hill and Dover Heights.
Anthony Ruskin Row and his fiancee, Alison Hall, bought a two-bedroom unit in Woollahra last September and locked into a one-year honeymoon mortgage rate of 7.09 per cent.
But with three interest-rate rises since then and more on the horizon, Mr Ruskin Row, 28, said he was concerned about the higher repayments when the fixed term ended.
"We're pretty worried about what'll happen come September,'' he said. "It's definitely going to affect our disposable income, big time.''
