Cost of living crisis? SA really has a cost of housing crisis!

A new report released today by the South Australian Council of Social Service (SACOSS) shows South Australians are affected much more by a ‘Cost of Housing’ crisis than a general ‘Cost of Living’ crisis.

The report finds that increases in rents and mortgage payments have dwarfed other price increases, and those costs account for the biggest proportion of the budget for households who have them. However, around a third of households don’t pay rent or a mortgage because they own their house outright, substantially dulling cost of living pain.

Since September 2021, non-housing inflation (the prices of everything except housing, such as food, utilities and transport) has gone up by 16.3% while

• Rental prices for a new tenancy in a 2-bedroom unit in Adelaide have gone up by 41%; and 
• Average mortgage payments have gone up by 155%.

And source of income has had a significant impact on how much pain the recent inflationary period has caused to different households. Average wage earners have not seen their wages rise to keep up with inflation. Coupled with extreme increases in mortgage payments or rents this is causing a real cost of living crunch for these households. 

Likewise those on income support payments (like JobSeeker) have received increases in payments above CPI but it also hasn’t helped them very much because the base rate of payments was already well below the poverty line and too low to make ends meet.  

And households with cash savings have benefitted from rising interest rates. For example, average income from a fixed term deposit of $100,000 has increased from $9.62 per week in September 2021 to more than $90 a week in December 2024.  But with rents and mortgage payments so high this hasn’t helped many households because they don’t have enough savings to benefit from increased interest payments. 

This report is a timely complement to the Grattan Institute’s Renting in retirement publication earlier this week, which showed two in three retirees who rent are in poverty. This is a crisis that needs to be fixed, but the flipside in the SACOSS report is that 73% of pensioners own their own home and 70% have more than $100,000 in financial assets. The key determinant of poverty here is clearly housing – not age or pension.

SACOSS’s Cost of Living Update No. 60: Inflation, Housing and the Cost of Living ‘Crisis’ is available via the SACOSS website. 

Quotes attributable to Ross Womersley, SACOSS CEO

This report challenges not just our understanding of current cost of living issues, but what to do about them.

The report makes clear that there needs to be a fundamental focus on housing affordability and incomes. Instead of focusing on supermarket prices, we would be better to focus on why wages are not increasing to cover inflation, or the inadequacy of income support payments like JobSeeker.

There is a vital and direct role for the South Australian government. We need more public and community housing to increase supply and put downward pressure on rental prices, and we need caps on rent increases for existing tenants so that people are not forced out of their rental homes by rising prices.