Renters more than home owners feel the cost-of-living crunch

What they found is that renters and those in the 30- to 34-year-old age bracket have put the brakes on discretionary spending the hardest.

The report’s cost-of-living pressure indicator, which measures changes in an individual’s total and discretionary spending, has risen sharply over the past year and according to CommBank iQ, is positioned to increase further in the future quarters of 2023.

As CommBank iQ’s head of innovation and analytics, Wade Tubman noted that the data clearly showed that renting versus owning created the deepest divide between Australians’ stress levels.

According to the report, home owners, as a group, are feeling less pressure than other Australians, even though recent interest rate increases have put property owners in the spotlight.

In fact, a third of those with mortgages have savings buffers of two years or more. In addition, half of all home owners are mortgage-free, giving them considerably less to worry about as expenses rise.

The stress levels of home owners compared to renters are consistent with the firm’s life-stage analysis, finding that the older Australians are, the less stress they feel from current inflation figures.

Across the board, older Australians were found to be increasing their expenditure while younger customers were cutting back. Those from the ages of 25 to 35 were found to be making the biggest cuts to spending; they’re also the demographic that makes up a large proportion of the country’s renters. In the first quarter of this year, as compared to last year, those under 35s increased total spending by only 3.4 per cent, while spending among those over 35s rose by 7.7 per cent.

Interestingly, while discretionary spending has declined in almost all categories, there’s one area where Australians are still parting with their pocket change: experience-based activities, such as travel.

“What we’re seeing is a COVID rebound effect — a continued desire even as late as March 2023 for consumers to catch up on the experiences that they missed out on during COVID,” commented Mr Tubman.

Household goods, meanwhile, have been the first area where Australians have cut back, with spending on items such as furniture down 11.6 per cent over last year. Apparel, too, has dropped 4.3 per cent.