Almost A Quarter Of People Are In Severe Financial Stress And Can’t Afford To Pay Their Rent

More people than ever are paying more than 30% of their income on rent, putting them under financial stress and at risk of not paying rent or mortgages.

Figures issued by the Commonwealth Bank showed that almost a quarter of people are spending at least 30% of income on housing.

The 30% mark is considered to be the point at which households come under significant financial stress.

Before COVID, the number of households in financial stress was about 20%. Among those on low incomes, the share has risen from 17% to 22%.

High owners are least affected as most own their home, but the proportion has grown from 11% to 15%.

Part of the pressure is coming from high stamp duties, the tax paid when a property is purchased.

Stamp duty costs on the median Melbourne house is now $49,700, and Sydney has a stamp duty of about $45,000. That is a six-fold increase on stamp duty paid in the 1980s.

Victoria has also been found to have the highest property taxes of any state or territory.

Commonwealth Bank economist Stephen Wu told the Sydney Morning Herald that banks were seeing more households, both those renting and those with a mortgage, under financial pressure.

“The share of households above that 30 per cent threshold is higher than pre‑pandemic across all household income quintiles,” he said.

“Households in the third and fourth income quintiles have the highest share of households that devote more than 30 per cent of their income to mortgage and rent payments. This share has increased noticeably over the past 18 months, a common theme across all income cohorts except for the lowest-income households.”

He said the pressure was caused by higher rents and mortgage repayments, and was being felt most by those in the 24-30 age bracket.

The research showed that with house prices growing faster than wages and stamp duties climbing, people are being forced out of cities and into cheaper areas. With government rent assistance being swallowed up by higher rents, experts say the number one thing that will ease the pressure is to simply build more houses where people want to live.