CommBank Household Spending Insights lifts in June despite renters reducing spending

A surge in rental prices in the past year has seen renters cut back at a faster rate, while those who own their home outright spend up.

Household spending lifted in June, according to Commonwealth Bank. Picture: Chris Pavlich

Renters are pulling back on household spending at a faster rate than any other group as record low vacancy rates and a shortage of stock fuels a surge in rental values.

The CommBank Household Spending Insights for June shows that spending by renters is down 0.9 per cent in original terms in the year to June 30, compared to a 1.5 per cent increase for mortgage holders and 2.1 per cent for those who own their home outright.

The HSI index showed that spending overall rose 0.6 per cent in June in seasonally adjusted terms, to 150.5, following a 0.7 per cent uplift in May.

Renters have been hammered in the past year, with the national vacancy rate at near record lows of 1.46 per cent in June, according to PropTrack. A lack of properties coupled with the largest increase to the national population fuelled by a surge in migrants has resulted in rents skyrocketing.

PropTrack reports that rent for the average dwelling nationally increased 10.3 per cent to $640 a week in the year to June 30, with Sydney the most expensive city with an average weekly rent of $740. Perth recorded the sharpest increase for dwellings at 18.2 per cent, to $650 a week.

A shortage of houses and a strong in population has seen rental values skyrocket in the past year. Picture: NCA NewsWire / Flavio Brancaleone

CBA chief economist Stephen Halmarick said the high cost of living had had an uneven impact, with young people – who were more likely to be renting – the hardest hit.

“While it was somewhat surprising to see household spending rise for the second month in a row, we have witnessed a significant disparity in spending behaviours across home ownership categories, as renters pull back on spending in the year to June while mortgage holders and outright owners have increased spending,” Mr Halmarick said.

“This suggests younger Australians, who are more likely to be renting, are tightening their wallets and likely spending more on essentials, given these are the fastest-growing spending categories so far this year.”

Eight of the 12 HSI categories rose in June, led by spending on recreation (3.2 per cent), hospitality (2.1 per cent) and food and beverages (0.9 per cent). Hospitality is up 3.8 per cent for the year, with pubs, taverns and bars and food delivery services the biggest drivers of the spending ­increase.

The CommBank HSI index tracks month-on-month data at a macro level and is based on de-identified payments data from about 7 million CBA customers, comprising roughly 30 per cent of all consumer transactions.

Mr Halmarick said the index would be an early indicator of the impact of the income tax cuts and electricity rebates that began on July 1. He expected that while households would have more money at their disposal, the next move from the Reserve Bank would still be a rate cut, but he said this would be dependent on employment and inflation data.

The ACT recorded the strongest growth in spending, up 1.5 per cent, followed by NSW and South Australia, which both recorded an increase of 0.7 per cent.

Western Australia and Victoria were both up by about 0.5 per cent, while Queensland and Tasmania saw 0.4 per cent and 0.3 per cent increases respectively.

Originally published as CommBank Household Spending Insights lifts in June despite renters reducing spending