Renters cop it as wealthy spend it

between younger people who rent and those who either have a mortgage or own their homes is widening, as cost-of-living pressure forces renters to slam the brakes on discretionary spending.

It comes amid a deepening split between consumer categories, with essentials such as insurance, education and utilities attracting more spending but goods and services that consumers can sacrifice, like gym memberships and a glass of beer at the pub, falling.

Meanwhile, home ownership is more than ever highlighting the difference between the haves and the have-nots, as spending by renters has lagged that of their homeowning counterparts since late 2022, according to new household spending research from the Commonwealth Bank. The challenging economic environment is disproportionately denting this cohort as they cut their budgets wherever they can to pay for mounting rents.

It’s a different world at the other end of the spectrum, where people who own their own homes outright with no mortgage – typically older Australians – continue to spend strongly and at around five times the growth of renters.

The latest CBA Household Spending Insights (HSI) has revealed that in April on an annual basis renters’ spending grew by only 1.3 per cent, while homeowners with a mortgage grew spending by 4.5 per cent and owners with no mortgage grew spending across goods and services by 6.3 per cent. Given inflation is running at almost 4 per cent, it means that renters saw a fall in spending in real terms – the only cohort among the three to be negative.

“The spending increase is definitely the softest for renters, and in general that’s going to be the younger cohorts on lower incomes,” CBA economist Stephen Halmarick said.