“Instead of going for a technology upgrade,people seem to be saying,‘Well,maybe I don’t need that this year,’” Tsang says. “I think there’s a lot more of that going on now.”
Purchases of household furnishings and equipment are down 12 per cent over the past six months compared with the same period in 2022,while spending at department stores is down 3 per cent. The illion data also shows spending on childcare fell.
Forking out for basics
The spike in inflation since early 2022 has forced households to spend a lot more on life’s basics,especiallyaccommodation and fuel.
A standout has been the increase in spending on rents;illion’s data shows weekly rental payments over the past six months have been 12 per cent higher compared with the same period last year.
Health was another unavoidable expense that rose in 2023 – spending on health practitioners over the past six months has been 12 per cent higher compared with the same period last year. Tsang says increasing gap fees for medical services,such as visits to the GP,are one driver of the increase.
But we’re still going out
It’s not all bad news,though. Australians have not given up on their morning coffee or weekend brunch – illion’s data shows spending at cafes this year has been “comparable” with that of 2022. The same goes for spending at pubs and restaurants.
“People are giving up on some things,like bigger ticket items,but they don’t seem to want to give up on going out,” Tsang says.
More borrowers are stressed
The Reserve Banklifted interest rates five times in 2023,making it 13 increases since May 2022. The bank’s official cash rate,which flows through to variable mortgage rates,is at a 12-year high.
So far,credit delinquency rates are relatively low,but pockets of financial strain are emerging. “It is clear that there is repayment stress,” Tsang says.
The share of personal loan accounts with at least one payment overdue jumped by 20 per cent in the year to September,from 2.63 per cent to 3.15 per cent,illion’s data shows.
Mortgage delinquencies,and the number of home loan borrowers seeking hardship arrangements with banks,have also risen. At the start of 2023,about 16,000 home loan accounts were under a temporary hardship arrangement. By October that had reached 23,000,illion’s analysis shows.
People aged between 36 and 45 account for the biggest share of home borrowers falling behind on repayments. “That’s no surprise,” Tsang says,since people in that age group have relatively large mortgages with high repayments.
Delinquency hotspots
Some urban regions have higher levels of mortgage stress than others.
In Sydney and Melbourne,the postcodes with the sharpest increases in the share of home loan accounts in arrears this year were mostly in outer suburbs. They include the Liverpool area in Sydney’s south-west and Cranbourne area in Melbourne’s south-east.
This table shows some hotspots for home loan stress.
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