Think tank flags rising repayments, stagnant wages and higher taxes as key pressures on households
A growing mortgage burden is playing a significant role in the erosion of Australians’ living standards, according to a new analysis by the Institute of Public Affairs (IPA).
The report reveals that a full-time worker now spends 46% of their income on mortgage repayments, a sharp rise from 32% in 2022.
“A mortgage burden that rises so sharply over this brief time period highlights a sudden rise in financial stress and challenge to living standards,” the IPA stated.
However, recent data from Roy Morgan suggests some relief may be emerging. The proportion of mortgage holders considered “at risk” of mortgage stress fell to 26.5% in March 2025 — down 1.2 percentage points from the previous month — following the Reserve Bank of Australia’s 0.25 percentage point rate cut in February, its first in over four years. The figure is the lowest since June 2023, when rates were last at 4.1%. Mortgage stress could decline further if the RBA lowers the cash rate again in May, Roy Morgan said.
Beyond mortgage pressures, the IPA pointed to a drop in real net disposable income as another driver of declining living standards. Between the 2021–22 and 2023–24 financial years, per capita income declined from $75,672 to $74,718 – a $954 fall in real terms.
Rising numbers of Australians holding more than one job were also cited as evidence of economic strain. The total number of multiple job holders surpassed 1 million for the first time in December 2024, 100,000 more than in mid-2022.
“This sharp increase indicates that Australians are taking on extra work at the same time that real net disposable income per capita has declined,” the think tank said in its report. “People are working more but earning less in real terms.”
The report outlined cost-of-living pressures outpacing wage growth. Prices for key essentials – including food and beverages (up 12%), gas and household fuels (up 33%), rents (up 17%), and insurance (up 35%) – climbed significantly between June 2022 and December 2024. Over the same period, wages rose by just 10%.
Tax burdens have also increased. The average tax paid per person rose from $21,158 in 2022 to $23,906 in 2024 – an extra $2,748.
“On average, each Australian is paying more in taxes than before,” the IPA said. “This can be explained by the effects of bracket creep and inflation, among other things. Rising wages pushes taxpayers into higher tax brackets, while rising price levels of goods and services incurs added tax through the GST.”
Public debt was the final indicator the IPA used to track declining living conditions. The report estimates that federal government debt will rise from $895 billion in 2022 to $1 trillion by 2026. On a per capita basis, that represents an increase from $34,416 to $36,388.
“A higher debt load per individual means Australians may face greater financial pressures in the future, directly impacting living standards,” the IPA said. “Higher government debt levels means that Australians are likely to face higher taxes in the future – meaning diminished disposable income and added financial stress.”
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