Financial pressure is being felt by everyone from high-income earners to the unemployed.
Wage growth is stagnant and household savings have shrunk as costs increase across rent and mortgage repayments, food, energy bills, petrol, public transport, and clothing.
The temporary stall in the Reserve Bank’s cash rate won’t bring immediate relief for Australians who have seen 12 interest rate hikes in the past 14 months.
Interest rates are currently at 4.1 per cent, and national inflation is now at 6.2 per cent, while WA's rate of inflation is the lowest in the nation at 4.9 per cent.
The looming interest rate cliff is expected to affect hundreds of thousands of Australian mortgage holders when their fixed interest rates jump to double or almost triple as early as this year.
“Everyone’s doing it tough, particularly now as they move from a fixed interest rate mortgage rate regime to a variable mortgage regime," Premier Roger Cook said at the Supreme Court Gardens on Tuesday ahead of the August RBA meeting.
Recent Roy Morgan research shows 19 per cent of mortgage holders, or 922,000 Australians, are considered ‘extremely at risk’ of mortgage stress, while 1.43 million Australians, or 28.8 per cent of mortgage holders, were ‘at risk’ of mortgage stress, over the three months to May 2023.
For renters, median rents increased 17 per cent in the Perth metro area to $560, up from $480 a week compared to the same time in 2022, according to this year’s Anglicare WA’s Rental Affordability Snapshot.
Meanwhile, as rent prices rise, the number of available rentals in WA dropped by more than 16 per cent compared to the same time last year.
“As the Rental Affordability Snapshot shows, the spike in rents, persistent low housing availability, and the rising cost of living, are combining to create a world of pain for an increasing number of Western Australians," Anglicare WA CEO Mark Glasson told Business News.
“Years of neglect and under-investment in social housing have left people on low incomes struggling in the increasingly unaffordable private rental market. We need a long-term solution to build social and affordable homes to restore the health of our housing system."
In the South West and Great Southern regions, rent increased 24 per cent to $520, up from $420 compared to the same time in 2022. In the North West, rent increased 25 per cent to $750, up from $600 compared to the same time in 2022, the snapshot revealed.
“The State Government’s recent investments in this area have been welcome, but the housing pipeline takes time," Mr Glasson said.
"WA needs immediate rent relief for low-income households, similar to the Residential Rent Relief Grants scheme introduced during COVID-19.
“Without immediate action by both federal and state governments, more households will plunge into housing stress, more names will be added to the social housing waitlist, and more families will descend into poverty, and even homelessness.”
Rise in food relief need
Economic factors, including rising inflation, high interest rates, and stagnant wage growth have impacted the rise in demand of food relief services, which has increased since COVID.
There was a decline in the call for Foodbank services in WA during COVID on the back of the government’s stimulus support strategies which, according to Foodbank WA CEO Kate O’Hara, lifted many out of poverty.
The impact of rising interest rates since then has forced many to turn to food relief to help pay the bills.
“The ongoing interest rate hikes and the impact on household budgets is leading many people to seek food assistance services,” Ms O’Hara said.
“With every interest rate rise between Aug 2022 to May 2023, we have seen our service delivery grow,” she said.
“To meet this demand, we are focused on a challenging and more costly food supply network where the cost-of-living crisis is also presenting ripple effect challenges.”
Foodbank WA experienced a 35 per cent increase in daily average customers in June this year compared to the same period last year.
Last month, the food charity assisted an average of 759 customers a day, with almost 16,000 customers coming through its network in the month.
“In the last 6 months, from end of January to end of June, we experienced a 39 per cent increase from last year. This is up 79 per cent from the same period in 2021,” Ms O’Hara told Business News.
Daily foot traffic across Foodbank WA’s services reached around 700 to 800 people per day in March 2023 and more than 1,000 households in April this year – more than double the 300 to 500 people per day two years ago in May 2021.
“The cost-of-living crisis hasn’t discriminated, with most Western Australians feeling the effects of a tightening budget,” Ms O’Hara said.
“Those most vulnerable in the community have been hit the hardest, with the latest rate hike pushing people further into poverty.”
