Housing costs continue to be a major burden on working class people in Australia with more than a million households struggling with mortgage stress. People are considered to be ‘stressed’ when their income doesn’t cover their regular costs.
According to data released by Digital Finance Analytics almost a third of all owner-occupied dwellings suffer from mortgage stress. A separate Finder survey found that 40% of mortgage holders were living “month to month” while another 7% were “barely able to make repayments each month”. Around 2% of mortgage holders are already in arrears with their payments.
All up, about half of all mortgage holders have difficulty making their payments despite interest rates being at a record low 1.5%.
The main areas under stress are newer working class suburbs on the urban fringe. For example, Leumeah and Chipping Norton in Sydney, and Narre Warren South and Berwick in Melbourne, are some of the worst affected.
Low wages coupled with persistent cost of living increases are the main drivers of this stress. This is added to property prices that have been overinflated in recent years, forcing many people to take out big mortgages.
Many young families have stretched themselves with large interest-only loans that could only be serviced with two pay packets. The conversion of many of these loans to principal-and-interest loans in the coming months will mean extra costs that many will be unable to afford. If one wage earner was to lose their job, the situation could turn dire very quickly.
With house prices beginning to drop in most areas, some of those who decide to sell may find that they owe more than their homes are worth. Major problems are being stored up.
The capitalist market and the constant drive for profits are the causes of these problems. The only way to turn the situation around is to fight for socialist solutions that take housing out of the market. Instead of housing being seen as something to make profits from it should be treated as a basic social right.
By Socialist Party reporters