People are feeling the pinch as the cost of living continues to rise.
A new report by independent social equality think tank Per Capita has found that secure housing is increasingly out of reach for the lowest income earners after systemic failures across all three housing domains: home ownership, the rental market and social housing.
Data from April 2022 found that of the households surveyed across the federal electorate of Nicholls, 35.3 per cent were experiencing mortgage and rental stress, while 31.60 per cent were experiencing financial stress.
In Shepparton (22.73 per cent) and Mooroopna (17.64 per cent) nearly a fifth of households surveyed were experiencing rental and mortgage stress.
These figures come from independent analyst Digital Finance Analytics’ rolling 52,000-household survey, which examines household financial flow stress.
Interpreting this data, Per Capita director of policy and research Matt Lloyd-Cape said the Nicholls figure of over 35 per cent mortgage stress wasn’t the worst in the country, but was still over a third of mortgage holders worried about making payments.
“Of course, for those regional towns that had an increase in resident numbers as Melburnians escaped lockdown, both rental and mortgage stress figures are likely to be much worse than the average figures for the area,” he said.
“And that is before the RBA’s rate increase kicks in.
“If rates rise again this year, as the major banks are forecasting, this figure will increase significantly.
“For example, if rates increase by another 25 basis points, someone with a $600,000 mortgage will see their monthly repayments increase by $160 compared to last week.
“It’s the same story for renters.
“With a third of Shepparton renters feeling that making rent is a stretch, the RBA’s increase will probably mean this figure increases, as landlords pass on their rate rises to tenants.”
Per Capita‘s report ‘Housing Affordability in Australia: Tackling a Wicked Problem’ concluded that the rate of home ownership was rapidly declining across the country, with 45 per cent of people born after 1990 not owning their own home by the age of 40.
“It’s worth remembering that an average home was only 2.5 times average annual income a generation ago. Now they are over six times,” Mr Lloyd-Cape said.
“While the decade of low interest rates has disguised this huge shift, recent home buyers are about to feel just how big even a small percentage of a (mortgage) really is every month.”
Per Capita executive director Emma Dawson said this rise in housing costs – including the recent 10 per cent rise in rent prices in regional Victoria – was putting the squeeze on Australians with the lowest capacity to pay more for housing.
“Our analysis finds the housing affordability crisis is caused by tax policies including capital gains tax and negative gearing that incentivise wealthier Australians to use houses as a vehicle to park and grow capital,” she said.
Mr Lloyd-Cape said while it was good to see Labor at least discussing housing affordability, there needed to be far greater commitment from all sides of politics to policies that tackled this huge social problem.
“This could include removing perverse tax incentives, like the capital gains tax discount on investment properties, improving tenants’ rights to secure long-term rentals, and getting wages increasing again so that the gap between wages and house prices closes,” he said.
“WHILE THE DECADE OF LOW INTEREST RATES HAS DISGUISED THIS HUGE SHIFT, RECENT HOME BUYERS ARE ABOUT TO FEEL JUST HOW BIG EVEN A SMALL PERCENTAGE OF A (MORTGAGE) REALLY IS EVERY MONTH. – MATT LLOYD-CAPE”