Data shared from Domain portrays a concerning picture: from September 2021 to September 2024, the median rent for houses has escalated by $180, a 38% increase, reaching $650. At the same time, renters of units faced an even steeper climb, with rents rising by $210 or 50%, jumping from $420 to $630.
This situation has drained renters of valuable disposable income, leading to significant cutbacks in various aspects of daily spending. The Commonwealth Bank of Australia (CBA) shared insights from their September Household Spending Insights (HSI) survey, based on their customer data, to further illustrate these financial pressures.
Interestingly, while overall nominal household spending saw a modest growth of 3.5% over the year to September, the same cannot be said for spending adjustments when accounting for population changes. Per capita growth was restrained at a mere 0.9%. With inflation hovering above 3%, in real terms, per capita spending has effectively contracted sharply.
The CBA survey highlighted a significant pattern: renting households faced the most profound reduction in spending, with per capita expenditure dropping to an annual growth rate of just 1.1% by September. In contrast, those with mortgages saw a minor growth of 1.2%, while individuals who own their homes outright enjoyed an increase of 2.3%.
These findings are consistent with separate data from CBA, indicating that younger Australians, many of whom are renters, are cutting back more than any other group, impacted severely by escalating rent prices. Conversely, mortgage-paying counterparts are grappling with high mortgage rates but not to the same extent as renters, while older homeowners, less burdened by these financial stresses, have been expanding their discretionary outlays significantly.
The same CBA data suggests a demographic split, where older Australians, typically homeowners, have been shielded from many cost-of-living pressures due to increasing house equity and income security. In contrast, the younger population, especially renters, face a dual burden of inflated living costs and rent hikes, leading to a tightening of their financial belts.
Source: CBA Spending Insights
