Is housing stress pushing Aussies into a ‘wellbeing recession’?

But while that slump was motivated by global existential fears, this depression has its roots in something more material: finances.

After easing slightly in the third quarter of 2023, financial stress increased in the three months to December, with financial stress levels now at their highest since 2016 and trending well above the survey average.

All eyes will now be on how Australians’ feelings about their finances track into the start of 2024, with NAB noting that the impact on wellbeing grows more severe the longer financial stress lasts.

“Historically when wellbeing has reached these low levels it has snapped back in the following quarter. Should these falls continue however, Australia would be in a wellbeing recession,” the report stated.

When it comes to the correlation between how finances impact wellbeing, it appears that the way in which financial factors impact wellness can be hard to quantify. But one factor that does track closely with how a person regards their level of stress is their housing situation.

As NAB reported, the relationship between money and emotions vary across income levels. While overall wellbeing improves as incomes grow, some groups buck this trend. For example, those in the $50,000 to $75,000 income group reported the second highest levels of wellbeing after the $200,000-plus group.

Australians earning between $100,000 and $200,000, meanwhile, are the most anxious of all income cohorts, meaning that wellbeing does not simply track upwards the more money one makes.

But when it comes to housing, according to NAB the correlation is clear:

“The relationship between home ownership and wellbeing is much less ambiguous. Home ownership continues to be correlated with wellbeing, with those living in their own house or apartment reporting significantly higher wellbeing than renters. And not surprisingly, those who own a home outright receive an even greater boost to wellbeing compared to those with a mortgage,” the report noted.

Related to that, the bank found that overall wellbeing is highest among people over 65 – particularly men – and retirees, as these cohorts are among the most likely to be living in homes they own without a mortgage.

Those who have not yet graduated into the phase of life when they can step back from work reported that planning for retirement weighted heavily on their stress levels – not having enough to finance retirement still is the biggest contributor to overall financial stress, and it increased to a seven-year high.