If you're a regular consumer of media, you'll likely often be warned of an impending crisis somewhere.
Less often you'll be informed of a current crisis. That's because we have support systems in place that kick into gear as crises approach.
Unfortunately, sometimes countries continue through and into a crisis. Right now Australia is in the middle of a cost-of-living crisis that has its roots in the property market, the availability of housing and high levels of personal debt.
Moody's Investors Service stated the obvious this week in a research note: "In February, new home loan borrowers needed an average 30.9 per cent of monthly income to meet monthly mortgage repayments, up from 26.4 per cent in May 2022", when interest rates began to increase.
"We expect that housing affordability will remain poor over 2023, with Sydney being the least affordable Australian city for housing," analyst Si Chen said.
Meanwhile renters across the country are dealing with the lowest rental vacancy rates in Australia’s history.
To be clear, the crisis isn't just producing stress, it's leading to distress, and the difference is important.
The key problem to is that there's little respite in sight for those struggling to make ends meet, which means public awareness of available alternative support is crucial right now.
The rental market is a 'mess'
The data emerging from the rental market is startling.
According to figures from CoreLogic, the national median weekly rental price for houses and units is now $564, up 10 per cent on last year.
"So it is a bit of a mess at the moment and for renters, rental affordability has become one of the key challenges," says Tim Lawless, CoreLogic's head of research.
"Through the pandemic we did see rental households becoming smaller as we saw group households breaking up. Almost guaranteed, that trend is now reversing and probably reversing pretty quickly."
Brisbane renters are copping the biggest annual increases in their rent payments. Over the past 12 months the median Brisbane unit rental price has soared 15.6 per cent, to $515.
Analysts point the finger at Brisbane's record low vacancy rates. "We've never seen rental vacancies this tight," Lawless told The Drum. "It's a one per cent vacancy rate in Brisbane and it doesn't look like it's budging from there. That's pretty much as tight as it gets."
The problem is there's simply not enough housing for the number of tenants looking to put a roof over their head.
But this is a national rental crisis. Since the onset of the pandemic, the combined capital city vacancy rate has more than halved, dropping from 3.2 per cent in March 2020, to just 0.9 per cent in February this year — a record low.
Across the capital cities, vacancy rates were at record lows last month in Adelaide, Melbourne, Perth and Sydney.
Regional vacancy rates look to have bottomed out in November last year, reflecting a slowdown in migration, although at 1.22 per cent, the vacancy rate is only marginally off the record low of 1.18 per cent.
Higher interest rates are also squeezing renters financially.
Reserve Bank governor Philip Lowe, addressing a parliamentary hearing last month, insisted tight vacancy rates were behind a surge in rental prices.
That may be true. But there's also nothing preventing a landlord still paying off a mortgage from passing on the higher costs of mortgage repayments to tenants.
Higher rates bearing down on borrowers
A housing shortage and record low interest rates also saw a surge in new home borrowing over the past decade.
The analysts labelled it FOMO – Fear of Missing Out on securing the Great Australian Dream of home ownership.
Cue the post-COVID surge in inflation and the Reserve Bank rolling out 10 consecutive interest rate hikes ranging from 0.25 to 0.5 percentage point increases.
Some banks are offering standard variable home loan rates above 8 per cent, an extra 3 to 4 percentage points on where they were a year ago.
Some borrowers have tens of thousands of dollars in their offset accounts attached to the loan, providing a sizeable financial buffer. Others, especially relatively new borrowers who pushed the limits on what they could borrow, are now under financial stress.
We know this because the National Debt Helpline is taking their calls. The call centre's data shows a surge in demand for counsellors since Christmas.
Call volumes, over January and February, rose from 16,765 calls to 21,617, an increase of 29 per cent compared with the same period last year. Visits to the service's website also spiked 33.5 per cent in the same period.
Tragically, the counselling service reports more calls from those contemplating suicide. The Reserve Bank has agreed to meet with Suicide Prevention Australia to better understand what the organisation is seeing in the community.
Laying blame
Reserve Bank Governor Philip Lowe has copped an enormous amount of criticism in recent months as the board has consistently increased the cost of borrowing money.
Australia has some of the highest levels of personal debt in the world. Combine that with low wage growth and evidence of corporate profiteering in a high inflation environment and you can see why the Governor has become something of a lightening rod for community anger.
However, as Lowe has repeatedly said, he has a job to do and he's getting on with it.
If you really want to point the finger, why not at the governments that rescued multinational finance corporations in 2008 and 2009 after they ran into big trouble as a result of taking on too much risk?
It enhanced what economists call moral hazard.
We now see more monopolies with the power to set consumer prices as they choose, and monopsony power, as Treasury research has recently showed, may explain why wage growth is stuck at low levels.
Or maybe we could look at the system of wage determination that, according to a year's worth of Wage Price Index data, has failed to see minimum and award wages keep pace with the rising cost of living.
There are also discussions to be had about tenants' rights, landlords' power, local government zoning laws, negative gearing, capital gains tax, franking credits or superannuation tax concessions. The list goes on.
Are there any tangible solutions?
Of course, as with any crisis, there's an early search for solutions and ways out of the dark tunnel. And for some Australians, that tunnel is pitch black.
As the Women's Economic Equality Taskforce chair, Sam Mostyn, reminded us this week, "the fastest [growing] cohort of people suffering from deep poverty and homelessness in this country today is women over 55".
Some of those women are living in cars, caravans and on the streets.
The Greens are calling for a freeze on rent increases as they look to establish an independent body to regulate rental prices. The federal government also has the option of raising Commonwealth Rental Assistance for those on low incomes.
Other options available to renters include share housing and opening up unused school and university boarding houses for cheap or free accommodation options.
An obvious solution for renters, especially in Melbourne, Sydney and Brisbane, is building more housing.
Meanwhile, mortgage borrowers in financial stress can start the process of wresting back control of their monthly repayments by calling their mortgage broker or bank manager.
Threatening to switch banks has been known to be a useful strategy in achieving a lower interest rate.
This week RBA boss Lowe also laid the groundwork for potentially pausing interest rate hikes in coming months.
A number of big investment banks and wealth managers have suggested this is a good idea – especially if the central bank wants Australia to avoid a recession.
Financial counsellors implore borrowers to call their bank's hardship department before they move into arrears.
It's during this time you may be able to work with your bank to find a payment solution.
Once you move into arrears, the bank may reduce your credit score which could cause many more financial and credit problems.
The critical point is that Australia is lacking fundamental reform that would alleviate at least some of this financial stress for millions of Australians. Too many households are left to find what are essentially band-aid solutions to serious economic problems.
Surely we can do better than that.
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