Those on ‘rental treadmill’ hit hardest in cost-of-living crisis, says the ANZ

While much as been said and written about homebuyers, Australians on the rental treadmill are actually doing it toughest in the current economic crisis, says ANZ.

Cost of living stress hitting renters hardest

ANZ says that people on the “rental treadmill” were suffering the most in the cost-of-living crisis, but regulatory red tape was making it harder than ever for them to buy their own home.

ANZ group general manager public affairs Tony Warren told the Queensland Futures Institute financial summit in Brisbane on Friday that rents in regional areas of the nation had reached 36 per cent of median incomes.

“It’s the people caught on the rental treadmill who are really feeling this,” Dr Warren said.

“Over the last few years, rents have typically been below 30 per cent of median incomes. It’s now 32 per cent in Brisbane and it’s 36 per cent in regional Australia. These are really substantial challenges for people.”

Dr Warren said that while Australia had just gone through the largest increase in interest rates over the shortest period of time, the effects were not yet showing in loan arrears data.

“The increase in interest rates has been quite extreme,” Dr Warren said.

“Yet if we look at our books, we have a metric called 90-day-plus overdue and they are at levels that are still substantially below where they were pre-Covid.

“Those of us with a mortgage are, of course, feeling the pain, but most are actually in a relatively decent financial position.”

People First chief executive Peter Lock told the forum that over-regulation in the financial sector was making it harder than ever for people to get off the rental treadmill and access home loans.

People First chief executive Peter Lock.

“It is becoming more difficult for ordinary Australians, ordinary Queenslanders, to get access to ­finance because of the level of inquiry, the fear of getting it wrong, the fear of fines,” Mr Lock said. “They are stifling what should be good, sensible, commercial decisions.”

Mr Lock, who heads the customer-owned bank formed following the merger of Queensland-based Heritage Bank and Ade­laide’s People’s Choice, said the volume of requests for information and investigation from regulators was unnecessary.

“There is absolutely zero co-ordination between regulators,” Mr Lock said.

“We’ve been pushing very strongly for a regulatory grid where regulators need to co-ordinate their actions before they ­approach banks.”

He said the regulation was not necessarily proportionate across the sector and was different for listed banks versus customer-owned lenders.

“We’ve got a few liquidity rules for example that APRA (the Australian Prudential Regulation Authority) are touting,” he said.

“These would be counter to competition and you would see the existing environment of smaller mutual banks disappear, which is totally contrary to the government’s call for competitive dynamism.”

APRA last year announced new requirements that would raise governance standards to manage interest rate risks, particularly for smaller banks, and comes after the regulator introduced tighter liquidity and capital requirements last year.

“Nobody is denying the need for good, proportionate and sensible regulation,” Mr Lock said.

“However, I think the sensible part of regulation could be questioned at the moment.”

Suncorp chief executive Steve Johnston said that while more home construction was needed to take the pressure of rentals and other housing markets, tougher planning laws had to be enforced to reduce the risk of flood, cyclone and fire damage.

Suncorp Group chief executive Steve Johnston.

Mr Johnston, who is about to put the finishing touches to the $4.9bn sale of Suncorp Bank to ANZ and emerge as a pure-play insurer, said it was a “brutal fact” that for a century people had built homes in places at risk of severe weather.

“One of the underpinning rationale for why we decided to take a very big step to divest the bank was some of the challenges that were emerging in the insurance sector over affordability,” Mr Johnston said.

“My big concern, particularly in Queensland, is that in the rush to get housing into the market that we’re going to do again what we’ve done for the last 100 years. We’re going to put homes in places they shouldn’t have been.”

Originally published as Those on ‘rental treadmill’ hit hardest in cost-of-living crisis, says the ANZ