Tenants are feeling the financial pinch as their dream of owning a home becomes tougher

TENANTS are feeling the pinch from rising rents pushing them further away from the dream of home ownership.

And many households admit they would struggle to cope with a financial emergency with a lack of cash savings and increased concerns about their jobs, the latest biannual ME Household Financial Comfort report shows.

CoreLogic RP Data figures show a 1.1 per cent rise in capital city rents in the last financial year and despite being the slowest growth rate in 20 years it’s hurting tenants.

The report examined the nation’s financial comfortability out of 10 (the higher the better) ? for tenants it was 4.35 compared to 5.28 for mortgage customers and 6.52 for homeowners.

The report’s co-author Jeff Oughton said Australians were doing it tougher than they were six months ago.

“There’s been a big fall in financial comfort in the first half of this year and it’s been largely due to the confidence in household’s ability to cope with a financial emergency and having lower cash savings,’’ he said.

“There also financial difficulty that renters and potential first home buyers are experiencing to get into the property markets as household prices continue to rise strongly in the major cities.

“They’re still faced with sluggish income growth ? across the economy you have only had a third of households get a payrise over the past 12 months.”

House prices continued to soar in the past 12 months ? in Sydney (+11.9 per cent) and Melbourne (+10.2 per cent.)

The report found two out of three households would find it a challenge to raise $3000 in an emergency situation and have little or no savings for a rainy day.

About 28 per cent of respondents said they had between $1000 and $10,000 in accessible cash.

MGD Wealth chief executive officer John Barton urged Australians to plan ahead so they could cope in tough times.

“Work out what you need to do to have a financial buffer and whether you need to cut back, whether it be getting a second job or when your lease is up renting a cheaper property,’’ he said.

news.com.au / August 3, 2015

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