Financial pressure on households has never been higher, and more of us are spending beyond our means than ever before, according to a long-running survey.
Since 2001, research firm Digital Finance Analytics (DFA) has been tracking the income and debt from a rolling sample of roughly 52,000 households, and in May 2023, it found mortgage and rental stress has never been higher.
“Even through the Global Financial Crisis, or even through COVID, the pressures were less extreme than they are today,” DFA Principal Martin North said.
“When it comes to mortgage stress amongst young growing families, 88 per cent of them [with a mortgage] are now in mortgage stress, and 65 per cent in the rental sector, are in rental stress.”
The survey looks broadly at financial stress, which includes mortgage stress but considers cost of living factors outside housing expenses.
It comes as inflation continues to rise, seeing the Reserve Bank of Australia last week lift interest rates to 4.1 per cent — the highest since 2012.
There are many ways to define financial stress, but DFA simply considers cash flow.
If a household has more outgoing costs than income, they’re defined as financially stressed.
“Nationally, more than 62 per cent of those in the rental sector are now having cash flow difficulties,” Mr North said.
“That translates to about 1.92 million households – that’s a big number of households.”
Young families and migrant families paying off new mortgages are under the most financial pressure and they aren’t just from populous metropolitan suburbs.
“We’re now seeing another cohort. More affluent households, mainstream Australians, are also being caught,” Mr North said.
“Whilst incomes are growing, in real terms, households are continuing to go backwards.
“Some of these younger households, first-time buyers, their real income is now lower than it was a decade ago.”
Migrant families facing homelessness
In Toowoomba, west of Brisbane, nine people live in 24-year-old Anas Khalaf’s house.
His family is one of more than 1,000 Ezidi families who have resettled in Toowoomba after the persecuted religious minority was brutally forced from their homes in northern Iraq by ISIS.
“In 2020, when we arrived to Toowoomba, groceries and rent was really easy [to afford],” Mr Khalaf said.
“From that time to now, life is getting difficult day by day.
“The rent is getting high, and for people who bought houses, it’s really difficult to pay for it now.”
Nayif Rasho is one of the Ezidi support workers in Toowoomba.
He says things have been most difficult for many of the single mothers in the community who lack extra financial support because ISIS killed their husbands.
“They are on Centrelink, and the Centrelink payment is $600 a fortnight and that is something I don’t think anyone can live on,” Mr Rasho said.
“I believe some of them will become homeless very soon.”
Mr Rasho said others were at risk of breaching their leases as rental increases forced some to move in with relatives.
“If the real estate finds out, they will kick both families from the house,” he said.
“That’s my worry and this is happening right now.”
Higher costs, lower incomes in regions
Toowoomba is home to more than 115,000 people.
Seventy per cent of the city’s mortgage holders and over 60 per cent of renters are in financial stress, according to DFA data.
Behind the raw numbers, the impact on some residents is turning to despair and frustration.
Laura, who has opted not to disclose her surname, is a single mother and previously only visited Food Assist intermittently.
But she now relies on the service.
“As the price of groceries and things have gone up, I come every week,” she said.
“These are our basic human needs that we’re struggling to meet each week, and it’s affecting everybody on a personal, mental, emotional level.”
The latest survey results saw a rise in both mortgage and rental stress in regional cities such as Ballarat, Toowoomba and Wagga Wagga.
“In regional Australia, we see extra pressures, not least because people are having to spend more to get around because they travel further distances, the cost of food tends to be higher,” Mr North said.
“The income that’s actually generated in many of those households are lower relative to the mortgages that they’ve got – so it’s a bit of a perfect storm in regional Australia at the moment.”
Following a boom in property prices across regional Australia during the pandemic, Mr North says prices in the regions are now trending downward, potentially eating into any equity that could help ease future financial pressure.
“My expectation is that while we’re going to see some home price growth in and around the major urban centres,” Mr North said.
“It’s more likely that prices will go the other way — they will fall — in many regional areas.”
In addition to those who have always struggled with grocery bills, Toowoomba Food Assist warehouse manager Holly Allsop is now seeing families with jobs and a mortgage turning to the service.
“I’ve noticed a lot of families, especially with the interest rate rise … whose mortgages have increased so just buying everyday food is getting harder and harder,” she said.
It wasn’t that long ago that Ms Allsop was on the other side of the counter.
Five years ago, she was battling depression and found leaving the house hard – in an effort to reset, she started volunteering at Food Assist.
Today Ms Allsop runs the service and manages dozens of volunteers.
“I take much pride in this place because I know it helped my family for many, many years,” she said.
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