Australia’s Bullshit Cost-of-Living Crisis

Australia is in an unprecedented housing affordability crisis, with both renters and homeowners feeling the pain. Rents have shot up to record highs across the country. In March 2025, the median rent across capital cities hit $650 per week – up by $20–$30 in just one year ( ​theguardian.com ) – even after several years of double-digit jumps. Major cities like Sydney now average $775/week for a house ( ​theguardian.com ), and even smaller capitals saw annual rent spikes of 5–8%. It’s a landlord’s market, and tenants are getting squeezed dry. Vacancy rates tell the story: the national rental vacancy is a pitiful 0.8% (far below the ~3% needed for a balanced market)​ 

( theguardian.com ). In some cities, vacancies are a microscopic 0.4%​    ( theguardian.com ). In other words, there’s virtually nowhere to go – desperate renters face fierce competition for any available home. An ABC analysis found even average-income families are now priced out of more than half the postcodes in cities like Sydney, Adelaide and Perth​ ( abc.net.au ). “It’s the worst on record,” warns the lead researcher, noting that affordable areas have vanished as an “oil stain” of unaffordable rents spreads across our suburbs ( ​abc.net.au )                ​( abc.net.au ). The Great Australian Dream of a secure home has turned into a nightmare of bidding wars, evictions, and homelessness for many.

Homeowners and would-be buyers are hardly better off. Mortgage interest rates have soared, following the Reserve Bank’s rapid-fire rate hikes. Since mid-2022, the RBA jacked up rates from near 0% to around 4.35% – the highest in 12 years – and banks passed it all on. As a result, monthly mortgage payments have jumped over 50%. On a typical $500,000 loan, that’s about $1,200 extra per month in repayments (a 52% increase since rates started rising)​ ( abc.net.au ). That huge burden is sinking many families’ budgets. People who stretched to buy a home when money was cheap are now drowning as repayments outpace incomes. Little wonder consumer spending is stalling – every spare dollar is going to the bank. For those still hoping to buy a home, the situation is dire: between 2002 and 2024, the house price-to-income ratio nearly doubled, with the average house now costing almost 9 times the average household income​ 

( news.gallup.com ). Incomes simply can’t catch up. Rents have more than doubled in that period too​ ( news.gallup.com ), making it harder to save a deposit. It’s no surprise that only 22% of Australians are satisfied with housing affordability while a record 76% are dissatisfied ( ​news.gallup.com ). Public frustration is at levels “unseen in most wealthy economies”, as Australia now ranks second-worst in the developed world (behind only Turkey) for housing unhappiness​

 ( news.gallup.com ). Decades of government failure to invest in social housing or plan for population growth have culminated in an acute housing deficit. Now working Aussies are forced to ask, “Can we literally keep a roof over our heads?”​ ( abc.net.au ).

Australian households are being shocked by exorbitant electricity and gas bills. In the past two years alone, power prices exploded by roughly 40% ( ​abc.net.au ). Even after some temporary relief, new hikes of 2%–9% are hitting in 2025​ ( abc.net.au ), adding further strain. For a country that exports massive amounts of gas and coal, paying such high domestic prices “defies logic” and reeks of an epic policy failure ( ​abc.net.au ). Under the current government’s watch, electricity costs have jumped 32% and gas 34%, leaving many families paying up to $1,300 more on energy than was promised before the last election ( ​liberal.org.au​theguardian.com ). It’s a bitter pill – Australians are literally paying the price for poor policy and corporate profiteering in the energy sector.

Motorists aren’t faring any better. Fuel prices have been surging at double the rate of inflation, making every trip to the pump a fresh pain. In the 12 months to June 2024, petrol and diesel prices climbed 7.7% – more than twice the overall CPI increase (3.8%)( ​news.com.au ) Petrol hovered around $1.80+ per litre on average, with capital city prices regularly spiking above $2/L. This spike in fuel costs – driven by global oil turmoil and generous retailer margins – has piled onto delivery costs and commuter expenses, compounding the cost-of-living crunch for working Australians​ ( news.com.au ).

 Feeding the family has turned into a wallet-draining ordeal. Grocery prices in Australia have surged at a staggering rate, making basic food staples into luxuries for some. An independent inquiry found that from early 2021 to late 2023, the cost of a typical basket of essential groceries jumped 15.2%​ ( humanrights.unsw.edu.au ). That is far above general inflation – and the details are even worse. In that period, cheese prices leapt 27%, bread went up 24%, and milk climbed about 23% ( ​humanrights.unsw.edu.au ). Other everyday items like eggs (+20%) and dairy products overall (+22%) similarly skyrocketed ( ​humanrights.unsw.edu.au ). These are huge increases in just over two years, on items people can’t avoid buying. Wages certainly didn’t rise 27% – so it means families have had to cut back, switch to cheaper diets, or go into debt to afford the same groceries. The pain isn’t evenly spread either: remote and regional areas often face even higher food costs, and price gouging by the supermarket duopoly has been alleged while they post healthy profits. Analysts note that food inflation became “ingrained” in 2023 and 2024, rather than a one-off spike​ ( theguardian.com ). Even as overall inflation has started to cool, food prices were still up about 3% through 2024​ ( theguardian.com ), meaning the elevated costs are sticking. Shoppers are noticing smaller packets and higher tags – effectively paying more and getting less. Households are responding by buying home-brand products, hunting for deals, and even skipping meals. Charities report record demand as people seek help putting food on the table. In short, the cost of living crisis hits hardest when it comes to the basic human need of food, and Australia – a wealthy food-producing nation – now finds too many of its own citizens can’t afford a healthy diet. It’s an indictment of corporate greed and ineffective government oversight in equal measure. 

 While the cost of everything has been going through the roof, wages have barely budged – meaning Australian workers are effectively getting poorer each year. Real wages (adjusted for inflation) today are actually 4.8% lower than before the pandemic​ ( sydney.edu.au ). Across the OECD, most workers saw pay keep up with prices (average real wages rose 1.5%), but not in Australia – we had one of the worst real pay cuts in the developed world ( ​sydney.edu.au ). After years of stagnant pay, surging inflation since 2021 delivered the killer blow to purchasing power. In fact, by early 2024 the value of the average Aussie wage fell back to 2010 levels ( ​theguardian.com ). Think about that – the typical worker can now buy no more with their weekly wage than they could 14 years ago. Fourteen years of progress wiped out! The situation has been described as “losing 14 years of living standards”​ ( theguardian.com ), and at this rate it could take well into the 2030s just to recover that lost ground​ ( theguardian.com ). During the pandemic and recovery, wages never “broke out” despite low unemployment; instead, profits and prices climbed while real pay went backwards. Even now, with unemployment low, wage growth is only around 4% and already slowing  ( ​theguardian.com )​

( theguardian.com ) – barely enough to match inflation, and certainly not enough to restore what workers lost. The bottom line: Australians are working harder but getting nowhere or going backwards in real terms. Bills are up, but pay is not. The promise that a job provides a decent living is ringing hollow, as families find their pay raises (if any) are immediately swallowed by rising rent, energy, and grocery costs. 

 If housing and food weren’t bad enough, insurance costs are spiking at record rates, adding another blow to household budgets. In the past year, insurance prices jumped 16.2% nationally – the steepest annual rise since 2001 ( ​theguardian.com ). To put that in perspective, overall inflation was 4% – so insurance went up 4 times faster than everything else on average. Insurers blame a series of floods, fires and other disasters (and indeed climate change is raising risks), but they’ve also taken the opportunity to fatten their profit margins. The ACTU slammed major insurers for showing “no mercy” during this crisis – jacking up premiums for essential cover while their own profit reports boomed ( ​theguardian.com ). For example, home insurance premiums jumped about 16% on average last year, and some insurers inflicted outrageous increases of 30%+ on their customers​ ( theguardian.com ) ( ​theguardian.com ). Virtually no one got a better deal – 19 out of 35 insurers hiked prices on 90% of policies reviewed ( ​theguardian.com ). Now many Australians are having to cut back coverage or drop it entirely, gambling with their homes and cars because they simply can’t afford the premiums. From health insurance (set to rise ~4% this year) to car insurance, from life insurance to even pet insurance, every type of policy is getting pricier​ 

( theguardian.com ). The cruel irony is that those who do the right thing – insuring their assets and health – are being punished with unaffordable rates. Meanwhile, banks and insurers have largely escaped the kind of political scrutiny aimed at supermarkets or energy companies, even as financial services profits swell on the back of Aussie families’ misery ( ​theguardian.com​theguardian.com ) . It’s yet another systemic failure when essential financial protections become luxuries. Uninsured and under-insured Australians will be one cyclone or medical crisis away from ruin, all because the “market” decided to squeeze them in pursuit of larger executive bonuses. 

 One would hope all this pain is at least fixing the nation’s finances – but Australia’s government debt is skyrocketing too, meaning today’s young and future generations will shoulder the cost without seeing benefits now. Despite talk of a small surplus, the reality is federal spending remains huge and debt is climbing year after year. National net government debt is forecast to increase from about 32% of GDP in 2024-25 (roughly $882 billion) to 35.7% of GDP (over $1.13 trillion) by 2027-28 ( ​pbo.gov.au ). In dollar terms, that’s like adding another $250 billion in debt in just a few years. We are on track to blast past $1 trillion in debt within this decade – an astonishing figure once thought unthinkable. For context, fifteen years ago Australia essentially had no net debt (the mining boom era); now debt is at multi-decade highs and climbing fast. The government is borrowing heavily to fund its programs, but where is the relief for average citizens? Instead of investing sufficiently in housing or energy to ease the cost of living, billions are spent on questionable priorities while the interest bill for taxpayers grows. Canberra’s “buy now, pay later” approach means Australians will not only endure today’s high prices and taxes, but also tomorrow’s higher taxes or service cuts to service this debt. Gross debt already hit about 34% of GDP ($940 billion) in 2024-25 and is headed to 36% ( ​aicd.com.au ) – the highest debt burden as a share of the economy since at least the 1970s. Yet we see little to show for it in public infrastructure or cost-of-living relief. It’s a bleak legacy of fiscal mismanagement: massive debt, and still a cost-of-living crisis unabated. Working Australians are effectively footing the bill twice – once through prices now, and again through future repayments on government debt. 

  Amidst all these pressures, Australia’s population has been surging due to record-high immigration, further straining housing, jobs, and services. The federal government opened the floodgates post-pandemic: net overseas migration hit an all-time record of about 550,000 people in 2023 ( ​theguardian.com ). That’s more than double the typical intake of previous years, and far above what was forecast. In fact, the Albanese government initially said it would reduce migration down to 375,000 per year by 2024, but reality blew past that – “big Australia” is back in full swing​ ( theguardian.com ). In 2022-23 alone, we added 536,000 migrants (net), the largest annual population bump in our history ( ​abs.gov.au​abs.gov.au ). Even 2023-24 is only slightly lower at ~446k net – still extremely high by any standard ( ​abs.gov.au ). This breakneck population growth (over 2% a year when you include natural increase) is directly fueling demand for housing and pushing rents higher, as more people compete for too few homes. It’s also swelling the labor pool, which some experts say helps keep wages down (employers aren’t pressured to raise pay when they can import workers easily). Infrastructure is groaning under the load – our roads, public transport, hospitals, and schools weren’t prepared for such a rapid influx. The causes are complex (including a rebound of international students and workers after COVID), but the outcome is clear: policy-makers did far too little planning, and ordinary Australians are now feeling the squeeze in longer hospital waits, school crowding, traffic jams, and of course, having even more trouble finding an affordable place to live. Even a pro-migration analysis had to admit that high immigration alongside underinvestment in housing has created a significant housing deficit ( ​news.gallup.com ). Instead of a controlled, sustainable intake tied to capacity, the government’s mismanagement has flooded the market, to the delight of property developers and big business lobbyists, but to the detriment of working families. Both major parties talk out of both sides of their mouths on this issue – but neither ensured we had the houses and infrastructure ready. The end result is systemic pressure: more people needing scarce resources, and long-time residents feeling like strangers in their own overstretched cities. In a very real sense, the costs of rapid immigration – higher rents, job insecurity, and diluted public services – are being paid by everyday Australians, all while the government pats itself on the back for GDP growth. 

  Australian workers are losing more of their paycheques to tax than ever. Thanks to bracket creep and the removal of tax offsets, the average income tax rate jumped 7.6% in a single year – the biggest increase of any developed country​ ( abc.net.au ). An average full-time worker now sees 24.9% of their wage snatched away by income tax​ ( abc.net.au ), nearly a quarter gone before they even pay a bill. This stealth tax hike (since tax brackets aren’t indexed to inflation) is effectively a government cash-grab from inflation. Aussies are paying more tax while getting squeezed by rising prices – a double-whammy on their living standards. Meanwhile, the promised relief from future tax cuts skews toward higher earners, offering little comfort to struggling middle and low-income households. The result is ordinary people forking over more and more to the taxman just to prop up a budget blown by mismanagement, while their real take-home pay shrinks.