Recent rampant house price growth paired with stagnant wage growth has put almost 150,000 households in mortgage stress, new data shows.
Martin North of Digital Finance Analytics’ analysis of household expenditure across the country, particularly in the wake of the recent series of rate rises inflicted upon homeowners, paints a grim picture and highlights Australia’s deepening unaffordability crisis.
According to his research, more than half (51.1 per cent) – of all South Australian households still paying off their home are in mortgage stress.
That’s 148,000 households, Mr North says, where the amount of money leaving the household each month is more than what has come in – the measure he says is the more accurate way of determining mortgage stress than a percentage of income on mortgage.
Households in two suburbs are feeling the pain more acutely – Gawler East in the Barossa council area, and South Plympton in Marion – where every household still paying off its home is currently in mortgage stress.
It was closely followed by Klemzig, Salisbury East, Campbelltown, Payneham and Paralowie, which all had more than 90 per cent of households in mortgage stress.
Digital Finance Analytics analyst Martin North
Mr North said life was tough for many, and he expected impending rate rises to make things even tougher for them.
“In some places most people are already in stress, which reduces economic activity, and home price growth,” he said.
“If it continues, expect more forced sales and home price falls.
“Renters have few choices, but to pay up to stay or seek cheaper further out – but petrol costs rising makes that difficult.
“In each case, people cut back on spending, buy cheap goods, poorer quality food, and cut back on medical and dental.”
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It’s worse for renters, Mr North says, with 66.7 per cent of all households, or 139,000 in rental stress.
In SA, there are four suburbs where every renting household has more money leaving the home than coming into it each month – South Plympton again, Prospect, Croydon Park and Royal Park.
“Home price growth continues to put pressure on households, while income growth is static in real terms,” Mr North said.
“SA has been impacted too by strong purchases by interstate investors.”
Canstar data insights director Sally Tindall. Picture: supplied.
Canstar.com.au data insights director Sally Tindall said all eyes would be on the Reserve Bank, with an interest rake hike next week almost a foregone conclusion as it struggles to reign in soaring inflation.
“Another hike on Tuesday would help get the inflation job done, but at what cost,” Ms Tindall said.
“This is what will be weighing heavily on the Board’s mind. Push too hard and the economy could buckle.
“Many households are already feeling the strain.
“Consumer confidence is sitting deep in the doldrums and Australians have already tightened their purse strings on the back of higher petrol prices and global uncertainty.”
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