Why housing costs are the biggest money worry for Aussies in 2025

If mortgage or rent payments are your biggest financial stressor at the moment, you’re not alone.

Smart’s cost of living report, Stretching Your Salary: How Australians are Managing Cost of Living Pressures^, found the biggest pressures on monthly budgets are mortgage payments (28.3% of respondents) and rent (24.4% of respondents).

In this article, we take a closer look at why housing costs are so high in Australia right now, along with some tips to help you make your money go further.

What's behind Australia's skyrocketing housing prices?

Housing costs have long been high in Australia, but right now, they’re hitting harder than ever. According to the Australian Bureau of Statistics (ABS), the average house price in Australia reached an eye-watering $1 million in the March quarter of 2025.

Experts say this is due to a perfect storm of problems: a growing population, a shortage of available homes, tax incentives for property developers, and years of underinvestment in social and affordable housing.

Michael Fotheringham, head of the Australian Housing and Urban Research Institute, told the BBC that while housing pressure is a global trend, Australia is feeling it more acutely.

“Globally, we’re seeing the term housing crisis being used in many developed countries, [but] our housing prices have risen sharply so it’s one of the less affordable countries overall,” he explained.

And renters aren’t catching a break either. When house prices climb, rents usually follow. In many major cities, there are more people looking for rentals than available homes, which is pushing prices up even further.

Practical ways to wrangle back some control over your housing costs

There’s a lot we can’t control about housing costs. But there are a few things that might help ease the pressure, or at least give you peace of mind that you’re doing what you can. Here are some ideas you could explore to take back control.

Talk to a mortgage broker or financial advisor

Getting professional advice can make a huge difference. Whether it’s refinancing, budgeting, or planning your next move, an advisor can help you understand what might work for you.

Smart has teamed up with Finspo, an online mortgage broker, to make it easy for you to access home loan advice*. Book a free chat with a Finspo broker today.

Make your voice heard

Reach out to your local MP or council. This might not fix things overnight, but pushing for change can make a difference long-term. Plus, advocating for your needs and your community can be empowering. 

Keep an eye on grants and assistance programs

There might be grants, first-home buyer schemes, or rental assistance available that you don’t know about yet.

Don't be afraid to negotiate

Lenders and landlords often appreciate open communication. If you’re struggling, ask about hardship programs, better rates, or flexible payment plans.

Look into salary packaging your mortgage or rent

If you work in healthcare, aged care, or the not-for-profit sector, you might be able to salary package your mortgage or rent.

This means paying for these costs from your pre-tax income, which could lower your total taxable income and make housing costs easier to manage.

Explore other salary packaging options

If salary packaging your rent or mortgage isn’t possible, there may be other ways to make your salary stretch further – like salary packaging a phone, laptop, or even a car.

What you can salary package depends on your employer and industry.

Where to from here?

There’s no sugarcoating it – housing costs in Australia are tough right now. But you’re not alone. From getting professional advice to exploring salary packaging, every small step can help you feel more in control.

If you’d like to learn how salary packaging could work for your rent, mortgage, or other everyday expenses, our dedicated team is here to help. Get in touch today to learn more.

This is general information only. Before entering into any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and obtain appropriate legal, tax, financial, or other professional advice based upon your own particular circumstances. This information is current as at July 2025.

^This report is based on Smart’s Cost of Living survey, where 1,379 customers were surveyed from 28 April to 18 May 2025.

* Smart may receive commission and/or administrative fees from Finspo, (as the case may be), in respect of any transactions that result from the referral.

The personal meeting mortgage health check is offered by Lab35 Pty Ltd trading as Finspo, Australian Credit Licence Number 521120. Any personal information provided to Finspo as part of the Mortgage Health Check will be held, stored and used in accordance with the Finspo Privacy Policy.