The true cost of pricey rentals
Below I'll explore how the cost of rentals alone is adding to the mental health statistics we are seeing today; a tale that's unfortunately not unfamiliar. It's a topic that comes off the back of recording two episodes with James O'Reilly , Financial Advisor and Director at Northeast Wealth, on Sex Money Mentality.
You can listen to these episodes on Spotify here:
When and where to buy property: https://open.spotify.com/episode/5KoEWeS4OR6dV6elhb7pbr?si=25e69c33af924aca
Setting a budget & what the money we spend may say about our self-worth: https://open.spotify.com/episode/0PaqcEUHG6D4RmzyWwiJCB?si=ec7d1629b241495f
How it started
Shortly after I recorded these episodes with James in my apartment living room on the Northside of Melbourne, I received the dreaded "Your Rent is Increasing" email from my landlord. My humble one-bedroom apartment was now going to cost a pretty $580 per week to rent.
I'd like to think I do alright with my salary and savings. I don't have university debt to pay, no longer have a credit card (the Qantas CC granted access to the Melbourne lounge but not LA and really only increased my spending habits, so I cut 'er up), and I have driven the same car for 5+ years. I travel a bit, fund my podcast (yes, contrary to popular belief, these things cost money), and boast a great workout wardrobe if I do say so myself. But I also have a side hustle on the weekend besides being an Executive during the week, and an investment portfolio which is currently returning 22%. I am in a very privileged position. There are know so many people who are living rough and having to make extreme sacrifices for a place to sleep at night. In 2021, over 120,000 people were experiencing homelessness in Australia (1).
So, with this newfound information, I sought out a place to buy.
Well, nothing to humble you like calling a couple mortgage brokers after inspecting a few modest 50m2, one-bedroom apartments you'd consider selling some furniture to fit into. As I came to find out, to live in the areas I'm interested in, not only would I have to strip all the money in my investment portfolio, I would also have to look at apartments or units far from the city centre if I wanted to buy within the next year.
I know countless friends who have recently been asked to vacate their rental because the owners are selling, who have to move in with 3+ people to fund the mortgage of a less-than-modern, cold, dark home near the tram line, and others who are lucky enough to have family nearby to move back in with. Many of our parents had homes and several children of their own by the same age we are; and here many of us are living paycheck to paycheck and competing with others waiting in line at sought-after rentals near the city.
I was curious how our mental health is impacted by high rental costs and a housing crisis. Logically, we know moving farther out of the city for more stability and cost-effective living arrangements will likely result in more disconnect and decreased social connection.
So, what's the true cost of pricey rentals?
Research published by the National Library of Medicine tells us individuals who spend over 30% of their income on rent report higher rates of anxiety and depression (2).
Other common stressors for young adults in 2024 may include:
Through COVID-19 restrictions, many of us gained a newfound understanding of the effects of social isolation. They were monumental and for many of us, unforgettable. Today, we're in the post-restriction era, but with the housing crisis and high cost-of-living, many of us are moving farther away to provide stable housing for ourselves and our families.
In Melbourne, and indeed many cities across Australia, median rental prices are at a record high, while vacancies are at a record low. 澳大利亚墨尔本大学 's social epidemiologist Rebecca Bentley noted "double precarity" - insecure housing and insecure employment - was correlated with even more decline in individual's mental health and wellbeing (3). Further, renters report feelings of helplessness and lack of control over their future housing situations.
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Mental health in rural and remote areas
Most research indicates the mental health and wellbeing of those in remote or rural communities in Australia is similar or slightly higher to that of those who live in or near the city. While we know there is increased prevalence of chronic illness, comorbidity, illicit drug use, and undiagnosed illnesses, including mental illness, in these areas, these regions are also highly communal, with social connection at the centre of daily activities.
We also know access to health services is much more limited in rural and remote communities. According to the National Rural Health Alliance, there are "4.1 times as many psychologists (per 100,000 population) and 2.6 times more mental health nurses employed in Major Cities than in Very Remote areas." (4).
Mental health in suburban areas
This is where the research gets interesting. What happens when health services are more accessible than in regional and remote areas, but we combine this with slightly less daily interaction and social connectedness for those residing in suburban areas (as compared to those in regional, remote, or inner-city communities)? A study and corresponding discussion published in The Conversation last year found the areas associated with an elevated risk of mental-ill health were those of medium population density and low-rise developments, such as single-family housing in the suburbs (5). The researchers suggested long car rides, less people gathering in public areas (think cafes, restaurants, sporting fields, and the gym), and less spontaneous face-to-face interaction contributed to lower rates of mental health and wellbeing.
What can we do?
Much like James and I discussed in our episodes together, it's important to choose housing based on what helps you sleep better at night, granted you are privileged enough to choose. Perhaps you prefer privacy and can make use of your longer commute to work by reading on the tram, working from home more frequently (hello flexible work arrangements!), or catching up with your favourite podcast on the way to the office. Or, maybe you bunker down with a friend or a lucky winner from Fairy Floss to split the cost of rent for more stability and security moving forward. This also doubles as another source for social connection right in your own living room!
The bottom line is: We know how important social connection is, and depending on the area you live in, you may need to put more effort towards embedding more human interaction into your day-to-day activities.
We are all facing the cost-of-living pressures in our own way. Don't falter if you come to find, like me, you aren't quite in the era of purchasing property. Lean on others for support, put in an extra effort to foster relationships you have regardless of where you live, and focus on savings wins and the long-term strategy while you pay (too much) towards someone else's mortgage.
How it's ending
As for me, I've decided on renting a home with a good friend, and am actually looking forward to having someone to come home to every night. The dogs are great, but human connection is important, after all!
References
(1) Australian Institute of Health and Welfare. (2024). Homelessness and homelessness services. Retrieved from https://www.aihw.gov.au/reports/australias-welfare/homelessness-and-homelessness-services.
(2) WUSF. (27 March 2023). Research shows high-rent burden negatively impacts mental health. Retrieved from: https://www.wusf.org/economy-business/2023-03-27/research-high-rent-burden-negatively-impacts-mental-health.
(3) ABC. (4 June, 2024). The ‘crushing’ effect of the rental crisis on our mental health and sense of self. Retrieved from: https://ndh.org.au/news/the-crushing-effect-of-the-rental-crisis-on-our-mental-health-and-sense-of-self/#:~:text=Home%20ownership%20is%20increasingly%20out,mental%20health%20from%20housing%20stress.
(4) National Rural Health Alliance. (July 2021). Mental Heath in Rural and Remote Australia. Retrieved from: https://www.ruralhealth.org.au/sites/default/files/publications/nrha-mental-health-factsheet-july2021.pdf.
(5) The Conversation. (25 May, 2024). Depression is more common in the suburbs than in city centres – new?research. Retrieved from: https://theconversation.com/depression-is-more-common-in-the-suburbs-than-in-city-centres-new-research-206311.