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Rent and mortgage repayments make up a significant proportion of Australians’ household budgets, with the younger generation finding entering the property market increasingly difficult.
A new KPMG analysis has shown that rent and mortgages have been Australians’ spending priorities in the average household budget.
The report unveiled the top five categories of household spending for each age group in 2023–24, noting home loan repayments were the top expense for all households.
Across the 25-34-year-old bracket, home loan repayments made up 18 per cent of average spending, while 8.9 per cent of their budgets went towards rent.
According to the data, the 25-34-year-old age group spent the most on rent compared to other groups.
Meanwhile, food spending came in at 9 per cent, dining out and takeaway were 8 per cent, and household goods accounted for 5.6 per cent of their budgets.
KPMG said the data reflected declining home ownership rates among younger Australians, with “generation rent” on the rise as individuals find it harder to save for a deposit and service a home loan.
The report also noted the age range saw the “most significant changes” in household structure in the last decade, with the number of those living alone rising from 15 per cent to 21 per cent amid a shift from larger shared homes to small apartments.
KPMG urban economist, Terry Rawnsley, said that a decade ago, young people were more likely to live together, sharing a house between as many as three or four individuals.
“Now those three to four young people each have their own place, which requires them to each have their own appliances,” he said.
In the 35-44-year age bracket, home loan repayments made up 22.3 per cent, dominating their household expenses.
Food spending followed suit, recording 9.7 per cent of the 35-44-year-old budget, other financial services at 6.6 per cent, dining out at 5.7 per cent, and recreation at 5.2 per cent.
KPMG data showed that despite mortgage repayment being a priority for the 35-44-year-old bracket, the repayment amount has reduced over time.
The analysis showed that the average Millennial dedicated $33,680 towards home loan costs in 2023–24 compared to $37,270 in 2013–14.
Rawnsley said this was not because mortgages were getting cheaper, but rather due to lower home ownership rates as younger people increasingly cannot afford their own properties.
The 35-44-year age group also experienced a 3.6 per cent increase in property-related expenses in the last decade, including real estate agents, legal and conveyancing services, as well as taxes on property transfers.
For Australians in the 45-54-year age bracket, mortgage repayments comprised 18.6 per cent of the average household budget.
Food expenses came second at 9.8 per cent, while dining out recorded 6.1 per cent of the budget, other financial services at 5.5 per cent, and recreation at 5.4 per cent.
Despite home loan costs making up a significant portion of spending, the 45-54-year bracket spent less on housing than the other cohorts, with the share of repayments falling from $33,260 in 2013–14 to $29,520 in 2023–24.
KPMG said the 1.6 per cent rise in spending on financial services, including transactions and property transfers, indicated that the age group remained active in the property market, relying more on equity from their first home to move up the ladder.
For those in the 55-64-year age bracket, home loan repayments amounted to 13.4 per cent of the average budget.
Similarly to the other age groups, Australians aged 55 to 64 spend mostly on food at 10 per cent, insurance at 7.5 per cent, other goods and services at 7.4 per cent, and recreation and culture at 6.9 per cent.
The report showed that older Australians have increasingly carried mortgage repayments later in life, with home loan spending rising by 0.5 per cent compared to a decade ago, when most had fully paid off their mortgages.
Rawnsley said older Australians were understandably “enjoying the fruits of their labour” before retiring, and did not have to dedicate such a large portion of their budget to housing.
“They are in a unique position where they are most likely still generating an income from work but are not burdened by large mortgages and are able to carve out a larger proportion of the household budget to recreational activities and discretionary spending,” he concluded.
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