Recent rampant house price growth paired with stagnant wage growth has put almost 2 million households in mortgage stress, and almost 2.5 million in rental 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, just under half of all Australian households were in stress.
That’s 1.8 million mortgage households, and 2.4 million rental 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.
“Assuming 10 million households, just under half are in stress,” he said.
“Of these 20 per cent are in real crisis.”
Looking at his data, it’s clear to see where this paint is being felt the most.
Let’s start with the mortgage households.
In New South Wales eight suburbs achieved a perfect score, with all mortgage-holding households already in stress. They were Campbelltown, Riverstone, Gundaroo, Mount Druitt, Dean park, Bossley Park, Stanhope Gardens and Randwick.
That perfect score – that’s not a good thing.
Digital Finance Analytics analyst Martin North
In Victoria things are a little better, with Berwick and Essendon the only two suburbs with all households in mortgage stress.
Queensland’s Pine Mountain, Highlands, Daisy Hill and Tanah Merah were fully stressed, while Gawler East and South Plympton residents were bearing the brunt of South Australia’s pain.
Perth had no suburbs score 100 per cent, Tasmania has Warrane, Old Beach and Seven Mile Beach, and the Amoonguna, Kilgariff, Ross, Arumera, Connellan, Ilparra area was the NT’s only listing.
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 about 2.4 million rental households across the nation in rental stress.
In New South Wales, it’s in Camden, where 100 per cent of mortgage-holding households are in rental stress.
While Victoria didn’t have a single suburb where every household was in mortgage stress, Noble Park gave it a good nudge, with 93.8 per cent of households stressed.
No Queensland suburbs had a 100 per cent rental stressed rate, though Caboolture came close with 95.9 per cent, faring better than SA’s South Plympton, Prospect, Croydon park and Royal Park where every household is struggling.
WA’s Armadale and Canning Vale saw the most pain, while there were at least 22 Tasmanian suburbs where households were maxed out.
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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