A couple asked him to sell a two-bedroom weatherboard home in Veron Street in Wentworthville, 27 kilometres west of Sydney, for $950,000 when it was only worth about between $820,000 and $830,000. They bought the home for $790,000, two years ago.

"I asked them where they got that number from and they said that was the number they need to pay back the $200,000 they borrowed from family to buy the home as well as repay their interest-only loan," he said.

"A lot of them initially paid $2000 to $2500 a month on their interest-only loans, and now they have to pay $4000."

"Many owners are going through loan issues. If they let the banks take over, the bank will sell their homes for a lesser amount than if they try and sell it now."

Commonwealth Bank and Westpac's interest-only loan books were 30 and 40 per cent of total residential exposure respectively. Chris Pearce

Inquiries for that home have been slow, Mr Kang said.

Areas which will struggle with higher repayments whether through a move to principal-and-interest loans or higher interest rates are suburbs between Parramatta and Blacktown and the Hills area between 35 to 45 kilometres west and northwest of the Sydney CBD, Mr Kang said.

All of them transacted at the peak of the market around 2015 and 2016.


"These are the areas which had the biggest capital growth during the boom," he said. "I've really got to fight to get buyers now."

Corelogic data shows many of these areas have had large price falls since the boom ended last year.

A little further south in Belmore another seller with an interest-only loan was so desperate to sell her home on Albert Street, Belmore, she agreed to a $925,000 price guide two months ago.

On the day of the auction however she jacked up the price to $1.05 million and rejected bids, drawing the ire of buyers because she had found a replacement interest-only loan.

"I don't need to sell now," she told Mr Kang, who had lost thousands in marketing costs.

LJ Hooker's Peter Tannous says about 25 per cent of his current listings are struggling interest-only sellers. In Guildford, a couple – a teacher and a factory worker – with two children asked him to sell an apartment they paid $385,000 about three years ago.

It is on the market for $428,000 after an initial price of $438,000 did not attract buyers.

"In another week, we will have to adjust another $10,000," he said.


"They've tried to roll over their interest-only loan but unfortunately they had no luck."

"There is stress out there, and it takes a lot to coax the truth out of the sellers."

Most of the lenders are big four banks, whose lending standards are now under scrutiny at the banking royal commission, Mr Tannous adds.

"One thing I have noticed is that the banks are reluctant to foreclose, and are trying to give these buyers a wide berth," he said.

Mr Tannous also says while stress is building, there is no immediate danger of a crashing market, because as long as sellers are pragmatic with their asking prices, homes will sell.

Independent agent N1 Holdings also agrees. Rather than houses however, it is getting apartment listings in the lower north shore of Sydney typically around the $1 million mark, with gearing of up to 80 per cent in loan value ratio.

While not every agent in the west is seeing distress, it is not clear if they are not in trouble.

"There hasn't been many distress sales and if there are the sellers are withholding that information from us," Starr Partners' chief executive Douglas Driscoll said.

"Very seldom do people put up their hands that they are in dire straits."