A booming housing market has resulted in renters struggling to make ends meet and mortgage owners stressed about upcoming interest rate rises, the latest CHOICE Consumer Pulse survey has found.
Among the most concerning findings from the August 2017 survey
is the rising tensions in the housing market, with 77% of Australians born
between 1980 and 1994 (Generation Y) worried about mortgage repayments and the
cost of rent.
The increasingly competitive housing market has resulted in a number of
issues for both renters and home owners, says Alan Kirkland, chief
executive of CHOICE.
"Record high house prices fuelled by cheap debt [have] seen the creation of
a class of small scale landlords grappling with what it means to treat
their customers – renters – with respect," says Kirkland.
"On the other side, there are younger first home buyers who managed to
enter the market at its peak and are now deeply concerned about what the
future holds for interest rates on their heavily mortgaged properties."
Wages growth is just enough to cover the rising cost of inflation, which is
making it hard for most Australians to keep up with rising housing costs.
This has led to 39% of renters finding it difficult to get by, compared to
25% of people who have a mortgage and 21% of people who own their home
The August 2017 Consumer Pulse report is the 13th consecutive survey where renters have identified
as feeling the burden of financial pressure. The stress has led to nine percent of
renters deliberately missing rental payments, while 28% have had to borrow
money from friends and family and 19% have had to live off a credit card
until pay day.
The financial stress of renting can be further exacerbated by the lack of
security in the rental market. Long-term leases – such as those used in
overseas markets – are not available in Australia. The survey found most
renters (83%) did not have a fixed-term lease, or were on a lease of less
than 12 months.
These findings are consistent with an earlier CHOICE investigation that
found renters tolerate serious housing quality issues. Pest infestations, for example from cockroaches, were a problem for 27% of renters, while 20% had to deal
with mould that is difficult to remove or is reoccurring.
Australians paying off a mortgage are worried about how an increase in
interest rates will affect the weekly household budget.
"Despite a record-low cash rate set by the Reserve Bank, 56% of Australians
are worried about interest rates," says Tom Godfrey, head of media at
"This indicates that people are watching rate movements very closely and
know that they will face tough times if rates go up."
Generation Y is the most fearful of interest rate rises. A fear of missing
out on owning a home led to 45% of them quickly buying a property, during a time
when interest rates were at record lows. Predictions of an interest rate
rise has led to 63% of them worrying about the added cost-of-living strain.
"This is a generation worth watching closely over the coming years," the
Consumer Pulse report notes.
"How it manages the financial pressures it now faces will be a test of
policy-setting successive governments have put in place."
Renters, mortgage holders, home owners: who's having trouble making ends meet?
Read an accessible text-only version of this infographic
About the survey
Designed by CHOICE, the Consumer Pulse survey gains feedback on the cost of living expenses facing Australians. It has run quarterly for three years and is nationally representative.