It’s amusing watching the spruikers over at CommSec continually put lipstick on Australia’s housing affordability pig.
The latest example came following yesterday’s ABS Household Expenditure Survey for 2015-16, which stated the following:
More than half the money Australian households spend on goods and services per week goes on basics – on average, $846 out of $1,425 spent – according to the 2015-16 Household Expenditure Survey (HES), released today by the Australian Bureau of Statistics (ABS).
“We can broadly think about household spending as either being for ‘basics’ or for ‘discretionary’ purchases – with basics covering essentials such as housing, food, energy, health care and transport,” ABS Chief Economist, Bruce Hockman said.
Today’s release shows that a growing portion of weekly outlays is spent on basics. Spending on basics accounted for 56 per cent of weekly household spending in 1984, growing to 59 per cent in 2015-16.
“The survey also shows that since 1984, the pattern of household spending has changed considerably,” explained Mr Hockman.
“In 1984, the largest contributors to household spending were food (20 per cent), then transport (16 per cent) and housing (13 per cent).”
“Jump forward to 2015-16, and housing is now the largest contributor (20 per cent), followed by food (17 per cent), and transport costs (15 per cent).”
Righto. So “basics” have taken a much bigger share of the household budget, driven by Australia’s increasingly expensive housing market.
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Not so, according to CommSec. Apparently putting a roof over one’s head is not an essential expenditure after all, but rather a discretionary good that Australians are willfully choosing to pay more for:
Less spending on essentials: The proportion of household spending spent on food, alcohol, clothing and tobacco fell to record lows in 2015/16.
Affordability lifts: A raft of items has become more affordable over the past six years including food, clothing, transport and recreational goods…
Over the past six years, weekly spending by Aussie families has risen just 15 per cent while prices have risen around 14 per cent. Overall this suggests little change in the number of goods and services bought per household.
Aussies are largely to blame for the fact that housing has become less affordable over time. Simply income has outpaced prices of a raft of goods like food, clothing and transport. This has meant more dollars are left over and many Aussies have decided to put these funds into the family home as well as investment properties…
The proportion of spending devoted to food, clothing, alcohol and tobacco fell to a record low of 22.8 per cent.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
