Australia’s housing crisis is putting more pressure on households, with mortgage stress, rising rents and a shortage of homes all adding to the strain.
Vanessa Merryweather, who has survived cancer, family illness and Covid, told 60 Minutes that one more rate rise could force her to sell her home.
After nearly 26 years in her house on Sydney’s outskirts, she is bringing in just over $900 a week while her mortgage repayments are about $800.
If rates rise again, she does not believe she can keep going.
“My house will be on the market in January if that’s the case,” she told 60 Minutes.
The pressure did not come from reckless spending. Ms Merryweather borrowed cautiously when she built her home and had once paid so far ahead that she had $60,000 available in redraw.
But Covid gutted her business, then came a devastating run of health crises.
“I got bowel cancer … I had surgery and 25 rounds of chemo and radio. And then the year after that, my eldest daughter got lymphoma,” she said.
Both survived treatment, but the financial buffer did not. That safety net was swallowed by everyday costs, and now even a hardship arrangement with her bank is not enough.
Asked what she stands to lose, Ms Merryweather was blunt. “My family home, my future, my security.”
Chief Economist and Assistant Governor Sarah Hunter told 60 Minutes the pain is real, but the Reserve Bank believes it is necessary to get inflation under control.
“It’s really, really tough. It does weigh on us here. It does weigh on the board,” Ms Hunter said.
“But we’ve got to get inflation out for the good of everybody.”
The Reserve Bank’s position is straightforward. Higher interest rates put pressure on households and reduce spending.
Over time, that is meant to cool demand and bring inflation down.
Ms Hunter argued that while other methods have been tried in the past, rate rises remain the tool that works.
“There’s no painless tool, but this tool does work, and that’s why we use it,” she said.
Still, the impact is falling hardest on people already under pressure. Ms Merryweather is now selling furniture, clothes and anything else she can part with to keep up.
“I’m just trying to sell things like mad,” she said.
The pressure extends well beyond homeowners. Australia’s housing crisis is also being driven by a lack of supply, with too few homes being built for a growing population.
Metricon chief executive Brad Duggan told the program the federal target of 1.2 million new homes by 2029 is unrealistic.
“We’re going to fall significantly short of that,” Mr Duggan said.
He argued the main problem is not how quickly homes can be built, but the costs and delays around them, especially planning bottlenecks, fees and the struggle to bring more land online.
“It feels like a tug of war to build homes.”
At the same time, policy changes are rattling investors, who remain a major source of rental housing.
On the Gold Coast, buyer’s agent Trent Muffet described investor demand falling away after changes to negative gearing for existing homes.
He warned that could backfire for first home buyers because fewer investors can mean fewer rental properties, higher rents and less chance for tenants to save a deposit.
“Now they have to pay more rent. So now they have to save more money,” Mr Muffet said.
In Victoria, Jellis Craig chief executive Andrew McCann painted a similar picture, with listing volumes sharply down and confidence badly shaken.
“Our business this year is 30 per cent down on its listing volume,” Mr McCann said.
The result is a crisis with no easy fix, as borrowers are being squeezed to fight inflation, renters are dealing with a tighter market and builders are struggling to deliver homes at the pace Australia needs.
Ms Hunter offered little immediate relief, warning there may still be “a little bit longer to go” before things improve.
For Ms Merryweather, the fight is now about holding onto the home where she has spent decades building her life.