Australians Intend to Spend $30 Billion This Christmas

Despite the cost of living crisis, Australians intend to spend $30 billion this Christmas on presents and festivities, which is about 10% more than they did in 2022. This averages out to about $1,479 per person, up from $1,361 in 2022, according to Finder’s Consumer Sentiment Tracker survey conducted last month.

The survey asked people aged over 18 in Australia’s five biggest states how much they intended to spend across the key categories of presents, food, alcohol, eating out and travel this Christmas. Victorians have the biggest spending budgets of $1,765 per person, followed by those in New South Wales at $1,657. The lowest spending state will be Queensland at $1,067 per person. Among the generational age groups, millennials intend to spend the most this Christmas at $1,924 per person on average, and Gen Z plans to spend the least at $1,023 per person.

The biggest budget category is airfares with an estimated $533 average spend per person. Residents of New South Wales will spend the most at $710 per person, while those living in one of Australia’s most traditionally popular holiday destinations – Queensland – will spend the least at $316 per person. Gen Y Australians will be the biggest travel spenders this season by a large margin, spending $898 per person for flights compared to an average of $440 or less across all other generational age brackets.

Domestic airfares hit a historical high in December 2022. They have since fallen but remain above pre-pandemic levels. A report released by the Australian Competition and Consumer Commission (ACCC) in June found that prices were coming down due to lower jet fuel costs, an easing in post-COVID travel demand and “the rising cost of living becoming a greater concern for consumers”.

But on a long-term view, the ACCC says a lack of industry competition means airfares will remain relatively expensive in Australia. “Without a real threat of losing passengers to other airlines, the Qantas and Virgin Australia airline groups have had less incentive to offer attractive airfares, develop more direct routes, operate more reliable services, and invest in systems to provide high levels of customer service, ACCC Chair Gina Cass-Gottlieb said. “Rex’s expansion onto major intercity routes and Bonza’s launch have been positive developments for competition, but their share of the market is small and there are barriers to growth.”

After flights, the next most expensive Christmas category was presents, with Australians planning to spend an average of $373. Among the remaining categories, Australians will spend an average of $249 on food, $192 on alcohol and $133 on dining out. Baby boomers are planning the booziest Christmas with an average alcohol spend of $524 per person, which is vastly higher than all other age groups who intend to spend $110 or less.

Many Australians say they are trying to rein in their spending by planning their Christmas celebrations early. The survey found 26% of respondents planned to take advantage of Black Friday sales and 25% will buy food and presents early to help control their spending. Almost one in five Aussies say they will implement a gift-giving limit, while 8% plan to make gifts and 7% plan to re-gift unwanted presents. Some families are giving up on gifts altogether, with 6% saying they’ve agreed to a present-free Christmas this year.

Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.

Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.

“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.

CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.

Sydney

Sydney’s median house price is $1,414,229 and the median unit price is $839,344.

Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.

Melbourne

Melbourne’s median house price is $935,049 and the median apartment price is $612,906.

Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.

Brisbane

Brisbane’s median house price is $909,988 and the median unit price is $587,793.

Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.

Adelaide

Adelaide’s median house price is $785,971 and the median apartment price is $504,799.

Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.

Perth

Perth’s median house price is $735,276 and the median unit price is $495,360.

Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.

Hobart

Hobart’s median house price is $692,951 and the median apartment price is $522,258.

Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.

Darwin

Darwin’s median house price is $573,498 and the median unit price is $367,716.

Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.

Canberra

Canberra’s median house price is $964,136 and the median apartment price is $585,057.

Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.

Australians Intend to Spend $30 Billion This Christmas

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