By Poppy Johnston in Canberra
Australian renters are tightening their belts more than mortgage holders as high living expenses weigh on tenants.
Hit hard by rising rents, the Commonwealth Bank of Australia household spending indicator revealed a 0.9 per cent fall in renter spending in the year to June.
Spending as tracked by the bank in its monthly index was stronger for outright home owners, lifting 2.1 per cent in the year to June, as well as for mortgage holders, rising 1.5 per cent.
CBA chief economist Stephen Halmarick said the level of disparity between household types was somewhat surprising.
“This suggests younger Australians, who are more likely to be renting, are tightening their wallets and likely spending more on essentials, given these are the fastest growing spending categories so far this year,” he said.
Spending by renters has been lagging their counterparts since late 2022 as rents moved higher, though mortgage holders have also been under pressure from higher interest rates.
Rising vacancy rates and stagnating or declining asking rents in most cities suggest the market is losing steam but choices remain limited and prices remain elevated.
Household spending has been overall weak though picked up 0.6 per cent over the month of June, to be 3.9 per cent higher over the year.
Separate Productivity Commission research suggests parental pay packets have little bearing on where most Australian incomes end up.
Almost 70 per cent of people aged between 41 and 48 were found to be earning more than their parents did about the same age, the commission said in a report.
The outcome leaves Australia nestled between Scandinavian countries on income generational mobility, in a welcome finding for commission chair Danielle Wood.
“We do turn out to be more mobile than just about any other country in the world,” she told AAP.
Yet it was an “interesting question” as to whether the trend would continue, Ms Wood said, with younger Millennials born in the 1990s not making the same progress as previous generations because of negligible income growth.
“That really speaks to me about the importance of economic growth and ensuring future income growth if we are going to see each generation be better off than the one before,” she said.
Wealth also tends to be “stickier” than incomes, with the former more transmissible from one generation to the next.
Investments in education, inheritances, as well as parents helping children onto the property ladder all contributed to the persistence of wealth across generations.
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