Housing pain grows for renters and homeowners in Australia

The COVID-19-induced economic downturn has more than doubled the number of people feeling the housing pain in Australia, new research from the Australian National University (ANU) showed.

Australians who were either unable to pay their rent or mortgage repayments on time shot up from 6.9 per cent in April to 15.1 per cent in May, according to the ANU survey of 3,200 people.

Housing stress became a more critical issue for certain age groups. The proportion of people unable to afford their housing costs almost tripled for Australians aged 18 to 24 and 35 to 44, jumping to about 27 per cent and 19 per cent respectively between April and May.

This is despite the more than 485,000 mortgages, about 8 per cent of all mortgages in Australia, which have been deferred since the onset of the pandemic, numbers from the Australian Banking Association show.

Those who have deferred their mortgages or rents still accrue debt on unpaid payments. For homeowners who have taken a mortgage holiday, interest charges are generally capitalised, meaning potentially higher total interest costs in the long run.

But for those who haven’t recovered financially and are barely keeping their heads above the water, the option to extend their mortgage holiday for up to another four months could help ease the pain temporarily. 

About 835,000 people have lost their jobs since March, according to the Australian Bureau of Statistics.

Governor of the Reserve Bank of Australia, Philip Lowe, said many who have kept their jobs have only managed to do so thanks to government stimulus and other support measures.

Young renters bear the brunt

The ANU research suggested that renters are facing a higher level of housing stress than mortgage holders.

About 16 per cent of mortgage holders have reduced their mortgage repayments and 8 per cent have had their repayments paused temporarily.

Meanwhile, about 10 per cent of renters have had a rent reduction and 2 per cent have frozen their rent payments.

Young adults are particularly affected by housing stress, with 44 per cent of those between 18 and 24 years of age unable to pay their rent on time.

Study co-author, Professor Matthew Gray, said many young Australians have had to deal with both housing and financial stress.

“This (housing stress) is while they are also likely dealing with other major stresses in their lives like potential loss of income,” he said.

"Everyone needs a safe and secure housing and a roof over their heads. If incomes start to fall at the bottom end of the income distribution, then many Australians will be on shaky ground."

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