AUSTRALIANS worst affected by interest rate rises are also among the least likely to benefit from cuts, the Reserve Bank governor says.
The central bank lowering the cash rate for the first time in four years has been welcomed by many but its impact will not be felt evenly, Michele Bullock said.
“Mortgagees have been badly affected by the increase in interest rates, but the group probably worst affected has been the lower-income people who are renting,” she told a parliamentary inquiry last week.
“(This) group often gets forgotten and they have really been hurt very hard by this.
“They’ve seen a massive increase in rents and they’ve also experienced massive inflation, so they’re not going to necessarily benefit from a decrease in interest rates.”
Between 1990 and 2022, the cash rate broadly trended downwards but median rents have only grown.
When the rate was set at its low of 0.1 per cent between 2020 and 2022, CoreLogic data revealed median weekly rent value surging across Australia.
Ms Bullock noted rents had begun to stabilise and said tenants would benefit now inflation has begun to come down.
But issues remain in housing supply and demand, which has made affordability a challenge.
As Australians prepare to head to the ballot box some time before May, housing action could be one of the biggest vote-winners.
About 90 per cent of renters, 73 per cent of mortgage holders and 61 per cent of people who owned their houses outright said housing affordability was at least somewhat important to their vote, according to polling from Redbridge.
The latter group, in particular, harboured concerns for their children and grandkids.
Only 11 per cent of Redbridge survey respondents gave the federal government a good rating on their housing affordability performance while more than half rated them negatively.
Voters believed politicians were “compromised”, according to Redbridge director Simon Welsh.
“They’re multiple property owners who own rental homes,” he said.
“It does seem to be this disconnect that is preventing reform.”
Many also became sceptical when governments were too focused on housing targets rather than reform.
The Government has committed to build thousands more in social housing, increased Commonwealth Rent Assistance and aims to construct 1.2 million new homes by 2029.
The Housing Industry Association is urging the Federal Government to make housing a priority as current policies were “acting as a handbrake”.
“Home ownership is the bricks and mortar that has helped Australia build a stable and vibrant society, but the opportunity to build and own a home has become out of reach for too many,” association Managing Director Jocelyn Martin said.
“Our industry is weighed down by increasing taxes and regulations, skills shortages, uncertainty in policy making and rising costs. “These all contribute to making housing less affordable to rent or buy and driving up construction costs and hurting industry productivity.”
