Mortgage payers beware! Your repayments could soon rise astronomically
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As we all know, the cost of living isn't getting any cheaper. It seems like every day there's another price hike on necessities. With many countries in the world still struggling with the consequences of the global recession, Australia is hoping that somehow we can avoid the worst of it.
And while we're all hoping that things won’t worsen, there's no denying that things are looking pretty scary out there at the moment – especially for homeowners.
There is hope that inflation will peak later this year or during the first quarter of 2023, but whether that will be the actual case remains to be seen. It all depends on how the global economic outlook plays out in the coming months.
To get a better understanding of how inflation could play out in Australia, let's take a closer look at some key domestic issues that could have a major impact on mortgage repayments for homeowners across Australia.
Rents are expected to rise faster than before based on research from housing data providers.
According to the latest inflation report from the Australian Bureau of Statistics (ABS), rental inflation is steadily running at 1.6% per year. However, ABS figures are calculated a bit differently and don’t show the full scope.
When looking at private housing data providers like SQM Research, they state that rents are rising more quickly than the 1.6% reported by ABS. Going by their research, capital city rents have risen by 21.8% in the last 12 months. While another research provider reported that rents will go up to 12.8% in the last quarter of the year.
Aside from rent, electricity and gas prices are also expected to go up. This is based on the recent Australian Financial Review Energy and Climate Summit, where experts warned that retail electricity costs would increase by 35% in 2023.
Gas prices, on the other hand, are expected to rocket in the coming months. The current market price is projected to double the median price in the future.
Household energy bills make up 3.47% of Australia’s consumer price index (CPI) weighting, and rents account for 6.23%. When combined, these two factors amount to less than 10% of the country’s overall CPI.
If the research made by housing data providers is fed into the CPI over a year, the rental component will contribute anywhere from 0.79% to 1.36 % to the inflation’s overall figure. If gas and electricity prices rise to 35%, it would contribute 1.22% to the inflation figure.
These two factors, once put together, will contribute anywhere from 2.01% to 2.58% to the country’s overall annual inflation.
However, any form of intervention by the Albanese government into the energy market might counter the upward price trend – even though this is still not certain. Nevertheless, the consequences of the scenarios stated above will certainly affect households and mortgage holders in the long run.
Well, there you go, dear members! What are your thoughts on this? Share them with us in the comments below!
And while we're all hoping that things won’t worsen, there's no denying that things are looking pretty scary out there at the moment – especially for homeowners.
There is hope that inflation will peak later this year or during the first quarter of 2023, but whether that will be the actual case remains to be seen. It all depends on how the global economic outlook plays out in the coming months.
To get a better understanding of how inflation could play out in Australia, let's take a closer look at some key domestic issues that could have a major impact on mortgage repayments for homeowners across Australia.
A global recession is expected to come next year, according to some experts. Credit: Pixabay in Pexels
Rents are expected to rise faster than before based on research from housing data providers.
According to the latest inflation report from the Australian Bureau of Statistics (ABS), rental inflation is steadily running at 1.6% per year. However, ABS figures are calculated a bit differently and don’t show the full scope.
When looking at private housing data providers like SQM Research, they state that rents are rising more quickly than the 1.6% reported by ABS. Going by their research, capital city rents have risen by 21.8% in the last 12 months. While another research provider reported that rents will go up to 12.8% in the last quarter of the year.
Aside from rent, electricity and gas prices are also expected to go up. This is based on the recent Australian Financial Review Energy and Climate Summit, where experts warned that retail electricity costs would increase by 35% in 2023.
Gas prices, on the other hand, are expected to rocket in the coming months. The current market price is projected to double the median price in the future.
Rent, electricity, and gas prices are expected to rise in 2023. Credit: Aleksandar Pasaric in Pexels
Household energy bills make up 3.47% of Australia’s consumer price index (CPI) weighting, and rents account for 6.23%. When combined, these two factors amount to less than 10% of the country’s overall CPI.
If the research made by housing data providers is fed into the CPI over a year, the rental component will contribute anywhere from 0.79% to 1.36 % to the inflation’s overall figure. If gas and electricity prices rise to 35%, it would contribute 1.22% to the inflation figure.
These two factors, once put together, will contribute anywhere from 2.01% to 2.58% to the country’s overall annual inflation.
However, any form of intervention by the Albanese government into the energy market might counter the upward price trend – even though this is still not certain. Nevertheless, the consequences of the scenarios stated above will certainly affect households and mortgage holders in the long run.
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