Canstar’s national sentiment checker survey* of more than 1,000 Australian adults completed last week found 95% or the equivalent of 19 million^ people feel financially stressed right now.
The key driver of worry heading into August was rising inflation and living costs, and the effect this would have on the standard of living people have come to expect.
This was closely followed by concerns that savings rates will stay low for longer, resulting in less interest for people to live off. The third biggest worry among those surveyed was job loss or a reduction in working hours.
Canstar finance expert Steve Mickenbecker said the Consumer Price Index showed annual inflation for the June 2021 quarter jumped up to 3.8%, due to pandemic-related impacts on petrol prices, supply chain constraints limiting the availability of some goods and the paring back of COVID-19 financial support.
“It’s hard not to worry about inflation when it’s costing more to fill the car up at the petrol station or you’re seeing an increase in the weekly shopping bill,” Mr Mickenbecker said. “This is particularly concerning if lockdowns are impacting your earnings and you’re worried about losing your job.”
He said the Reserve Bank was unlikely to change its outlook for interest rates to remain steady until 2024 without wages going up, despite last quarter’s cost increases which are expected to be short-lived.
“Retirees are even more concerned at the prospect of inflation rising, as long term low interest rates and fixed pensions won’t keep pace. Retirement nest eggs are shrinking.”
Low savings rates and rising property prices a concern for budding first home buyers
He said low interest rates were also hurting savers hoping to see their pot of money grow into a viable deposit for their first home.
“Canstar’s analysis shows not one bank increased savings rates in July, with the top rate in the market only 1.35% or up to 3% for adults under 30 years of age. 10 years ago the average bonus savings account with $10,000 deposited was earning $500 a year but now that’s closer to $70,” Mr Mickenbecker said.
“To get a decent return, many savers are considering putting their money into higher risk investments like stocks and property. More than half of Australians feel that property is the best investment right now.”
Just over one quarter (26%) of Australians surveyed said they were concerned about the burdens emerging today for future generations who are likely to be left with a high debt load and unaffordable housing prices.
“Rising property prices and the difficulty first home buyers face to buy into the market is a concern for potential buyers and their parents. Buyers can’t be expecting lower taxes to help them into the market; today’s debt means tomorrow’s taxes,” Mr Mickenbecker said.
When asked what the biggest impact lockdowns would have on the property market in Australia, topping the list was rising property prices caused by a limited supply of houses and units coming onto the market and increased demand for regional areas.
“With remote working and the perception that low density living has offered greater protection from some of the effects of the pandemic, almost a quarter of Australians expect ‘escape to the country’ and the growth of regional centres to become an entrenched trend, increasing demand for property there,” Mr Mickenbecker said.
*Source: www.canstar.com.au. Nationally representative survey of 1,024 Australians aged 18+ conducted week commencing 26 July 2021.
^Based on ABS Population statistics for adults aged 18 and over: 95% is the equivalent of 19,035,683 Australian adults.