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Despair on the Downs: Toowoomba tops nation for financial stress

About 40 per cent of Australians were facing financial stress from inflation, mortgages and rent, according to research firm Data Finance Analytics.

Mar 15, 2022, updated Mar 15, 2022

The extensive survey carried out by DFA showed that Toowoomba was the most financially stressed region in Australia because of its position as a growth district where new families were settling.

About 65 per cent of the city’s households in were experiencing mortgage stress, according to the survey.

Nationally, 60 per cent of young, growing families were in financial stress, but ahead of them was at least one rate rise and continued increases in food, fuel and other costs with inflation tipped to hit 5 per cent later this year.

The issue was now likely to clash with a federal election, but both sides would probably struggle to deliver any tangible relief for voters because the causes were largely global.

The DFA survey showed that while Queensland fared reasonably well there were pockets where financial stress was having a big impact. Toowoomba, Bundaberg, Ipswich and parts of the Gold Coast stood out.

The DFA survey found that in February in Queensland, 267,000 were in mortgage stress (38 per cent), 402,000 were in rental stress (40 per cent) and 149,000 investors were stressed (24 per cent). The aggregate for the state was 39 per cent were feeling financially stressed.

A separate report from SQM Research found that the rental vacancy issue was worsening. Brisbane now had a vacancy rate of 1.5 per cent and capital city rents had jumped almost 10 per cent in the past year.

“The situation now represents a significant rental crisis across the country,” SQM’s Louis Christopher said.

“The flooding may exacerbate the shortage of rental accommodation in NSW and Queensland in coming weeks and the new surge in international students and other overseas arrivals will continue to create shortages in our inner city regions.”

The most stressed are young growing families (59 per cent) and multicultural families (49 per cent), but just behind them was the young affluent (48 per cent) and mature stable families (44 per cent), professionals (44 per cent), disadvantaged fringe (45 per cent) and the battling urban (48 per cent).

Rental stress was now being felt by a large section of the community, including the young and affluent and wealthy seniors.

“There is considerable difficulty across the different segments,” DFA’s Martin North said.

“Pretty much everywhere you look inflation is rampaging and the consumer price index of 2 to 3 per cent is clearly understating the reality for most people. ”

He said the average mortgage was 15 to 20 per cent higher than it was a year ago.

While Toowoomba topped the nation with a financial stress aggregate of 48 per cent, or 22,000 households, Ipswich, Bundaberg and Benowa were also significantly impacted.

Areas around the Gold Coast were also found to be high in rental stress.

Meanwhile, consumer inflation expectations have jumped to a near 10-year high as petrol prices soar above $2 cents a litre.

The weekly ANZ-Roy Morgan consumer survey found inflation expectations rising by 0.4 percentage points to 5.6 per cent, its highest level since November 2012.

The impact on household budgets from record petrol prices has also seen consumer confidence tumble 4.3 per cent in the past week to 95.8, its lowest level since October 2020.

“Households are certainly noticing the effect of higher prices on their finances,” ANZ head of Australian economics David Plank said.

The recent spike in global crude oil prices to around $US130 per barrel as a result of Russia’s invasion of Ukraine could see further rises in petrol prices in the short term.

However, oil prices were heading back down towards $US100 a barrel on Monday.

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“If the recent fall in oil prices is sustained, we would expect inflation expectations to ease,” Mr Plank said.

Inflation expectations can in themselves create price pressures as workers chase higher wages as compensation.

Reserve Bank of Australia governor Philip Lowe warned a business conference last week the annual rate of inflation could reach at least four per cent due to rising global oil and commodity prices as a result of the war in Ukraine.

Rising food prices locally due to the floods on Australia’s east coast will add to these pressures.

Some economists expect annual inflation could reach as high as five per cent compared with 3.5 per cent now.

Economists will scrutinise the minutes of the RBA’s March 1 board meeting on Tuesday for any further thoughts on what the Ukraine war may mean for the Australian economy.

The Australian Bureau of Statistics will also release its residential property price report for the December quarter.

A survey released on Monday found “lockdown-like” consumer hesitancy was having a negative impact on a key business sector – sole traders – with reports of cancelled contracts.

More than 50 per cent of respondents told the Hnry Sole Trader Pulse they had clients “cancel or defer work due to Omicron” and 53 per cent rated current business conditions in the period as “similar to being in lockdown”.

Creatives and gig economy workers were going backwards financially, with 60 per cent of gig workers and 36 per cent of creative freelancers rating their business performance as poor last quarter, the survey found.

 

 

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