How cost of living pressures are biting householders
Australian householders are hurting and, like their American counterparts, seeking to lower their cost of living in all areas of their lives.
Residz Team 3 min read
If you’ve just returned from a grocery shop at the supermarket, you’ll have noticed something different. It takes no time at all to unload the car.
Groceries have suddenly become very easy to carry in - that’s because $150 gets you so very little these days.
I did a $150 shop and stood back looking at the three half-filled shopping bags on the counter.
Really? Was that all I got for $150?
It came as something of a shock, which is ridiculous, given that I’m faced with this concrete example of the higher cost of living every few days ($150 worth of food doesn’t last long in our big household).
Hospitality Magazine cites the Australian Bureau of Statistics consumer price index analysis showing the average price of food and non-alcoholic beverages rose by 9.2% from December 2021 to December 2022 in Australia’s 8 capital cities.
It’s like charging another GST on top of our food prices, and it’s having a flow-on effect in food outlets in 2023.
“In order to maintain their profit margin, businesses have been forced to hike up menu pricing. Consumers will then opt for cheaper menu items with smaller profit margins, or may stop dining at a venue at all,” says Hospitality Magazine.
Independent Australia says Australia’s world-famous café scene is in for “a shaky few months” and off the back of expected cash rate rises, will need to “hold steady for the storm” that is the second half of the year.
No doubt a similar story in Australia, surveys out of the U.S. show that 44% of respondents said they are currently living paycheck to paycheck.
Real Estate Witch found that of those deciding to sell their home, around 1 in 5 planned on purchasing something more affordable. Some 22% of potential sellers said they are moving to seek a lower cost of living.
Overall, Americans seek a lower cost of living in all aspects of their lives, says Real Estate Witch.
“Three-fourths of Americans (74%) named a lower cost of living as the solution that would help them the most financially.”
For Aussie householders paying heavy mortgages, interest rate hikes and the high cost of living are also causing sleepless nights. Many are cutting back on their spending, exactly as the RBA is hoping.
According to Forbes, the big risk in the Australian economy is that rising rates crush our economy, sending us into recession.
“Rising mortgage repayments leaves a lot less for groceries, home repairs, petrol, going out for dinner, etc. And that’s the point,” it says.
“The RBA is hiking rates in order to pull money out of circulation—if people aren’t spending at the shops it is harder for business owners to raise prices.
“This is how they combat inflation, but when they do so, they risk sending the economy backwards.”
It’s hard to know how to find the balance. We still need to spend money, but if we’re paying high rents or big mortgage payments, we shouldn’t splurge too often. We need to learn to shop wisely.
One tip is to look at our relationship with money, says financial planner Paco de Leon.
"Our relationship with money is a mirror," says de Leon in an NPR article on spending. "How we choose to spend or not spend our money is a reflection of how we feel about ourselves."
He says insecurity, jealousy and other negative emotions can lead us to spend money needlessly. Take care of yourself so that when you have to make financial decisions, you're in a clear state of mind and less easily influenced by outside factors.
“A good night's sleep, breathing deeply, listening to music that makes you feel happy and spending time with people who appreciate you for you can go a long way,” he says.
It doesn’t fill up the trolley, but it may stop us feeling so bad about having to cut back.
About Residz
Residz has lots of research and data for renters, homeowners, and buyers and sellers about Australian real estate:
- If you’re considering purchasing or renting a house, make sure you download the PEXA Property Report for that address. We have 12 million addresses in our database, with every report offering information on internet speeds, crime trends, bushfire and flood risks, investability scores and a whole lot more.
- Would you like to sell your home and connect with home buyers willing to pay your dream price? Residz has the solution, for zero dollars. Put a DreamPrice on your home to test interest. Read about DreamPrice(™) here.
Photo by Bruno Kelzer on Unsplash