One third of people surveyed recently for the Choice Consumer Pulse Report said they find it difficult to get by on their current income, and two-thirds said they have cut back spending on non-essential items.
Australians are dipping into their savings, delaying purchases and using their credit cards to bridge the gap between pay days, according to a new consumer survey.
Of the 1,001 survey respondents, 31% said they were finding it difficult to get by on their current income, with 11% finding it “very difficult”.
Only 18% said they were “living comfortably”, with 5% responding that they were living “very comfortably”.
Renters are hardest hit
Renters in particular are in a tight spot. Nearly half (45%) are finding it difficult to get by as opposed to 25% of mortgage holders.
And city dwellers are faring better than regional Australians.
Less than a quarter of people say they are feeling comfortable on their current income, and the price of electricity, fuel and food are the biggest concerns.
Choice CEO Alan Kirkland says it shows households are doing it tough.
“Almost one in three respondents told us they find it difficult to get by on their current income, with one in five saying they have scraped through to payday by living off credit or borrowing from friends or family.
“This reveals some striking concerns with cost-of-living, which is perhaps not surprising at a time when inflation is outstripping sluggish wages growth, retail sales are fragile and the political debate remains focused on household expenses,”
“The people that are struggling the most are certainly people on low incomes,” he told the ABC.
What all this means…
While this is terrible news for those affected, it’s also bad news for our economy and for retailers.
Sure it means that more people will remain tenants because they’ll have difficulty saving up a deposit to buy their homes. But this is not good for our economy and not good for property in general.
I would rather hear that our economy is doing well and that there are more wealthy homeowners buying properties and pushing up property values.
One of the implications of these more difficult times we are enduring is the fact that interest rates are likely to remain low longer as the Reserve Bank tries to stimulate our economy.
It also means some segments of our real estate markets are going to be more affected than others.
If you’ve been following my blogs for a while you’ll know that I have always advocated investing in areas where there are more affluent people with high disposable income who one to live in certain suburbs and are prepared to and able to pay a premium to live their.
As I see it, the divide between prices in the inner and middle ring suburbs, and the outer mortgage belt areas is likely to increase, but there’s nothing new about that as I explain here where I explain the no 1 driver of capital growth.
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