Shock figures reveal huge level of mortgage, rental stress in Vic: See worst affected electorates

Shock new figures reveal the most financially stressed electorates in Victoria, with a peak urban development body declaring the state is “in the middle of a crisis”.

Shock new figures have revealed the huge level of mortgage and rental stress being suffered across Victoria.

The figures, based on federal electorates, show the most financially stressed area in Victoria is Hawke, on the western outskirts of Melbourne, where 80 per cent of mortgage holders under stress.

The seat of Ballarat is the next worst, at 79 per cent.

In Melbourne’s north, the federal seat of McEwen made the top three, with 75 per cent of mortgage holders under stress, followed by Cooper, at 68 per cent.

In the southeastern seat of Gippsland and Wills in Melbourne’s inner-north, two thirds of households with mortgages are in the same category.

The worst seat for rental stress was Deakin in Melbourne’s east where 89 per cent of renters are under severe financial pressure followed by Hotham, at 84 per cent, in the southeast.

Gellibrand in the state’s southwest and Dunkley in Melbourne’s southeast followed, with 83 per cent facing rental stress.

Megan and Patrick Cupitt are experiencing rental stress. Picture: Josie Hayden

More than half the renters and mortgagees in a third of the 151 seats in the House of Representatives are under financial stress with the pain concentrated in the outer suburbs and regions.

The hip pocket electoral pain map was prepared by mortgage specialists DFA.

The lion’s share of the federal seats for mortgage stress are in NSW with six of the top ten.

Martin North of DFA said the figures were deeply worrying.

“I think this is a bit of a disaster which has been building for a number of years but has been accelerating thanks to high inflation, high migration, lack of building supply and of course high interest rates in the context of real wage growth still lower than it was in 2010,” he said.

Mr North said the financial pressure on renters was worse at the moment than for people with mortgages.

“Even you go back 15 years the levels of stress for renters and mortgagees were very similar but it’s the stress for renters has really accelerated away since migration surged in 2022,” he said.

DFA defines financial stress as a household’s outgoings being greater than the money coming in each month, excluding big ticket items like holidays or a new car.

The findings come as the Albanese and Allan governments prepares to deliver their May budgets.

Many Victorians are in deep financial distress.

Major Victorian property organisations said the state government must reconsider its tax hikes to stimulate the construction of new homes.

Property Council of Australia national policy group executive Matthew Kandelaars said 30 to 40 per cent of the cost of every home was tax and in Victoria it was even higher because of bigger stamp duty costs.

“So if governments want to make housing cheaper, the most obvious place to start is by reducing taxes,” he said.

He added that the same costs were being passed along to tenants in new homes, making rental properties more expensive than they needed to be.

Urban Development Industry of Australia Victorian (UDIA) chief executive Linda Allison urged the state government to establish concessions to incentivise new housing supply as well as to reduce an 8 per cent additional stamp duty cost for foreign investors.

“We are in the middle of a crisis, so we are asking for crisis measures,” she said.

At present property taxes add more than 50 per cent to the cost of building a new house in Victoria, according to industry calculations – with stamp duty a significant facet of this.

Real Estate Institute of Victoria president Jacob Caine said after recent comments from Victorian Treasurer Tim Pallas about potentially axing stamp duty, he would “not be surprised” if there was a change to the unpopular measure in the state budget.

Mr North said there was a “very large segment of the electorate that rents and is not currently being well-served by the major political parties”.

“The Greens have worked that this is a disenfranchised group and they’re targeting them,” he said.

He also said migration was likely to become a more prominent political issue going forward and predicted interest rates would stay high well into next year meaning these levels of financial stress would be evident at the next election.

Former ALP strategist Kos Samaras who now runs pollster RedBridge said Australia’s mortgage and rental stress levels are regarded as some of the worse globally by the IMF.

“Anyone involved in politics who thinks that there will be no consequences from this at the next election is in for a rude shock,” he said.

CEO of community-run food bank Empower Australia Neil Smith said a 29 per cent increase had been reported in the past three months, with the food charity now providing food relief to close to 1500 people each week.

“We often have recipients say to us — this week it was a choice between rent and food,” he said.

‘There’s people out here struggling’

Stacey Bentley, 35, works three jobs to make ends meet while sharing a rental property with her 59-year-old mother and 18-month-old son Noah in Croydon North.

The family pays about $2000 monthly for a three-bedroom unit and is on a payment plan for house bills.

Ms Bentley said inflation and a lack of financial support made it difficult for the family to afford essential items and childcare.

Stacey Bentley with her son Noah. Picture: Josie Hayden

“At one stage my bill for childcare was $517 and I earned $513 that week – so that was my whole wage,” she said.

“By the time (the subsidy paperwork went through), my bill came to almost $3000 — I ended up in debt, in my head, in a way that wasn’t my fault.

“(Our politicians) shouldn’t be getting a pay rise when there’s people out here struggling.”

Couple Patrick and Megan Cupitt, aged 54 and 55, said they also experienced rental stress after moving into a two-bedroom holiday house for $700 a week, following their recent move from Launceston to Melbourne.

Wantirna South homeowner Ashley Deng, 30, also said the cost of living had surged particularly when buying groceries or dining at restaurants.

Ashley Deng with her daughter Emily Yang. Picture: Josie Hayden

“Every weekend when we go to the restaurant, they all have surcharges … and if we buy (only a couple of items) from Woolworths or Coles, that sometimes costs $100 (each time),” she said.

Where some Victorians are wasting money

• Paying too much on car and other insurance by not shopping around.

• Too many automatic direct debits for stuff people no longer use.

• Phone and internet expenses that are underused and too costly.

• High petrol prices that can vary by 50c a litre between outlets.

• Late fees on credit cards or on utility bills.

• Extended warranties on goods that already come with automatic warranties if they break quickly.

Late fees on credit cards or on utility bills are to be avoided.

Six ways to slash your mortgage costs

Extra repayments: When you can, every dollar extra paid off the principal is a dollar not attracting interest

Shop around: Competition remains fierce in the mortgage market

Hit other debts hard: Reduce other small, high-interest debts first

Offset your interest: Lower interest paid by directing all income into a mortgage offset account

Shun savings for now: You’ll pay tax on savings account interest, which is lower than the interest charged on the mortgage

Budget everything: Tracking everything you spend gives you an idea of where savings can be found

Shop around for the cheapest petrol, to save. Picture: Nicki Connolly

What to do if in financial stress

Seek help from a free financial counsellor by calling the National Debt Helpline on 1800 077 077

Contact your bank as early as possible, even before defaulting if possible

Make sure the new agreement is affordable, renegotiate if not

If the bank does not offer a hardship plan, you can appeal

What not to do

Don’t refinance without talking to your bank first

Avoid debt solution companies that offer to roll all the debt into one

Do not be tempted into getting your credit record cleaned