Recent data reveals that surging council rates are acting as a “silent mortgage“, significantly increasing the cost of homeownership in Australia. Over the past decade, council rates have surged by 39% nationally, outpacing inflation and other housing-related expenses.
Impact of Rising Council Rates on Homeowners
According to data from the Australian Bureau of Statistics, council rates have become a growing financial burden for homeowners, with rates rising faster than most housing-related costs. In 2024 alone, these rates increased by 4.9%, second only to rising rent costs.
This steep rise is making it more difficult for Australians to maintain homeownership, particularly as other essential housing costs continue to climb.
The ‘Silent Mortgage’ Phenomenon
Property expert Mansour Soltani from Money.com.au has described surging council rates as a “silent mortgage”. Homeowners are increasingly unable to shop around for better deals or renegotiate their payments, placing an additional strain on their finances. Combined with high mortgage interest rates, this double financial squeeze is pushing homeownership out of reach for many Australians.
Soltani’s analysis highlights that homeowners can no longer avoid or reduce these rates as they might with other bills, adding a financial burden that many are ill-prepared for.
Regional Variations in Council Rate Increases
Council rate increases vary across different regions in Australia. Canberra has seen the steepest rise, with rates increasing by 83% over the last decade. Hobart and Brisbane follow, with increases of 46% and 43%, respectively. In Melbourne, rates have increased in line with the national average, while Sydney saw a 35% increase.
These regional variations underline the growing divide in housing affordability, with some areas facing disproportionately high increases in council rates compared to others.
North Sydney’s Exceptional Rate Hike
North Sydney is set to experience an extraordinary rate increase of 87% over two years. The increase is tied to a significant budget overrun in the redevelopment of the iconic Olympic pool. The special rate variation, which will see a 45% increase in 2025-26 and a 29% increase in 2026-27, has sparked widespread protests, with residents expressing concern over their ability to afford the additional costs.
The dramatic increase has caught many residents off guard, with some learning of the hike only two weeks before it was passed by the council. These sudden, steep hikes have caused considerable distress among local homeowners, who feel overwhelmed by the additional financial burden.
Financial Strain on Vulnerable Populations
The rate hike in North Sydney has raised concerns about its impact on vulnerable groups, such as pensioners, single-parent families, and those living alone. An “ability to pay” study revealed that 43% of residents in North Sydney are considered “at risk”, indicating that a significant portion of the population will struggle to cope with these increases.
The impact of such rate hikes is not limited to those in North Sydney alone. With the growing trend of rising council rates across the country, many homeowners may face similar financial challenges, especially those on fixed or limited incomes.
With the national increase in council rates, the financial strain on homeowners is evident, and the growing concern around affordability is likely to continue as more rate increases are proposed across the country.
