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RBA increases to interest rates mean home buyers who bought at the peak are facing rapidly rising mortgage repayments

A bearded man stands with crossed arms in an lounge room

While some Australians may rejoice at the idea of ​​a drop in house prices, interest rate rises mean home owners face the prospect of their asset dropping in value at the same time their mortgage repayments steadily increase.

And those who bought recently, at the peak of the market, are more likely to have the most left to pay off on their loans, meaning interest rate rises will cause them the most pain.

Bobby Graham bought a house in January in Hobart’s outer suburbs for slightly more than he had hoped to pay, after saving for the past five years.

Just months before his purchase completed, as late as October, the Reserve Bank of Australia was still saying it expected interest rates would not rise until 2024.

There have now been three months of straight rate rises, and another due today.

While he is not struggling to meet payments, Mr Graham says the changing circumstances have meant he needed to adjust something else — his expectations.

He has had to make tweaks to his lifestyle and reassess his living expenses.

“It’s the perfect storm — you pay the higher price because you bought at the peak of the market then there is an increase in interest rates,” he said.

“And it becomes obvious that everything else is becoming more expensive due to inflation.”

He described the increases in his mortgage repayments as “a bit of a kick”.

A bearded man in a hoodie smiles
Mr Graham has had to re-examine his budget and adjust his expectations.(ABC News: Luke Bowden)

As part of his changes he has had to cancel several interstate trips planned for this year in a bid to save money and meet home and mortgage commitments.

“You pay so much of your income, just to maintain your house,” he said.

His advice to others in his situation is to take a thorough look at the household budget and adjust expectations.

Home prices dropping but interest costs going up

According to figures released on Monday by property analysis firm CoreLogic, median house prices in most capital cities are falling at a steady rate — and are expected to continue the trend.

In Hobart, there was a 1.5 per cent drop in house and unit prices in the past month, in line with similar falls in Sydney and Melbourne.

CoreLogic compares the downswing to the same drop experienced during the Global Financial Crisis in 2008 and the 1980s recession.

Gray roofs in a Tasmanian suburb
The RBA has increased interest rates for three straight months, with another increase expected this afternoon.(abcnews)

The Reserve Bank (RBA) is acting to stem inflation by increasing the cash rate, which in turn is being passed onto consumers via higher mortgage rates.

The RBA is expected to lift the rate again when it meets today.

The head of research at CoreLogic, Eliza Owen, warns potential home buyers while they may feel like they are buying a house at a discounted price, the reality of interest rate increases will see more spent on repayments.

“The interest you pay on the debt you take out will be more,” she said.

Financial counselors expect demand spike

A woman with glasses stands in front of a sign reading Anglicare
Anglicare financial counselor Fiona Moore said people should call the National Debt Hotline if they were struggling.(Supplied: Anglicare)

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Banks are winding back mortgage amounts as interest rates continue to rise

a couple with a baby and two dogs

Property prices may be dropping but that doesn’t mean that wannabe home owners are suddenly celebrating.

Lenders are simultaneously winding back how many people can borrow for mortgages as they factor in higher interest rate repayments and cost of living pressures.

Corey Chamberlain and his partner were just told by their mortgage broker that their borrowing capacity with a smaller lender has dropped by more than 20 per cent.

That’s compared with a national property price drop of just 2 per cent in the last three months.

“I’m gutted, really,” Mr Chamberlain told ABC News.

The couple with a young child were first approved for a mortgage of around $975,000 in late 2021, and then again when they went back for pre-approval earlier this year.

That’s when Australia’s official cash rate was still at 0.1 per cent.

Since May, the Reserve Bank has been raising the cash rate to tackle emerging inflation that’s hitting the Australian economy.

Today, the RBA is expected to hike the cash rate again to take it to 1.85 per cent.

Banks are passing the higher cash rate onto borrowers in the form of lending rates, which is impacting the head repayments on people’s loans.

In October, the regulator APRA also told the banks to raise the minimum interest rate buffer on loans from 2.5 per cent to 3 per cent.

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Developer Cedar Woods shelves Brisbane townhouse project leaving homeowners ‘screwed’

Developer Cedar Woods shelves Brisbane townhouse project leaving homeowners 'screwed'

A homeowner who bought into an off-the-plan development in Brisbane, which has now been shelved, has described the development company’s decision as an “absolute joke” claiming that it would leave his family financially “screwed”.

Chris* signed up to buy an $800,000 townhouse last year in the $180 million development called Greville, in the northern suburb of Wooloowin, and was scheduled to move into the new home with his partner and daughter in 2023.

The project was set to deliver around 250 homes, a recreation zone and pool, as well as a community park, and had originally been marketed as an urban village just 5km north of Brisbane’s CBD.

Now, the family has been left angry and upset after Perth-based developer Cedar Woods announced it was delaying the project, blaming rising costs, labor shortages, significant rainfall events in Queensland and extended construction timelines.

Buyers have been given the option to have their deposits refunded and will be offered the first choice when the project is remarketed, according to the developer, which it said hoped would be in the second half of next year.

But Chris claims they are “stuck in no man’s land” because the developer doesn’t have a clause in which they can cancel the contract, a claim Cedar Woods would not comment on.

In a letter to buyers, Cedar Woods proposed that both the developers and buyers agree to “a mutual termination of the contract” as the project would be “indefinitely delayed”.

But so far the family says it has refused to accept the return of their deposit, nor had any responses to other inquiries.

“There’s never been any consultation whatsoever. There was a post on Facebook in April about how they would start (construction), but then the post was deleted and we got phone calls saying everything was cancelled,” Chris told news.com.au.

“Financially, we have been really screwed by Cedar Woods’ decision because now the property prices are still up and we personally don’t think they are going to fail as much as speculators say. Add this to the pressures due to the cost of living going up and interest rates going up, greatly limit our choices.

“We have been looking at similar places and we are not going to get anything for under $1 million for the area.

“We tried to put an offer on a development of four townhouses and the real estate agent basically laughed at us as they are after the mid-$1 million mark for a place with the same square meterage and floor plan similar to what we had bought. ”

Cedar Woods did not respond to a news.com.au’s question on whether the townhouses and apartments would be sold at a higher price once the project was relaunched.

A post on its official Greville Facebook page back in April that said works were under way has now been deleted, but homeowners were left blindsided when the project was shelved just a month later.

“Construction is off to a great start in 2022,” the now deleted post read.

“Despite the weather in southeast Queensland, we are happy to share that civil works on the site are partially complete and construction will begin shortly. It is an exciting time for Greville and we are excited to show you what is to come.”

Chris, who works as a project manager, added that communication had been poor and the couple were “most peeved” that there was “no real consultation” by the company about the decision to shelve the project.

“This decision has majorly impacted people’s lives and they just don’t seem to care,” he said.

Cedar Woods managing director Nathan Blackburne said the firm’s decision was extremely difficult, but it was the right decision in an environment where builders were facing additional risks.

“We know purchasers are disappointed and (we) have apologized to them. We greatly appreciate the understanding of our purchasers who in the main are aware of the current conditions,” he said.

Extended construction time frames and increased costs had meant that the particular stages could not proceed as completion wasn’t possible by specified completion time frames, I added.

“Cedar Woods has continued to engage with the affected purchasers and provide opportunities for further discussion while prioritizing the return of their deposit,” he said.

“The company hopes to re-engage with them when conditions in the sector are expected to improve over financial year 2023.”

But for Chris and his partner, who are in their mid-30s, their “huge” excitement about owning the townhouse has turned into a nightmare.

“We are tossing up if we have to move further out of town away from family, friends, work and childcare, which would make life more inconvenient, but that’s one of the only options we have,” he said.

“Cedar Woods made a decision to protect shareholders and their bottom line as they are a business and I get that, but the impact that it will have on our family and other families out there is not insignificant.”

Meanwhile, work is still continuing on the project site, which has left buyers furious with many lashing out at the developer on Facebook.

“Cedar Woods is continuing to finalize all of the civil construction, remediation work of the historical laundry and the delivery of the community park in preparation for the project to come back to market,” Mr Blackburne said of the continued works.

Australia’s construction crisis

It’s not the first project to be suffered this month in Australia’s embattled construction industry.

Perth developer Sirona Urban killed off a $165 million luxury tower, where more than 50 per cent of apartments had been bought off the plan, blaming skyrocketing construction costs and shortages.

Owner Matthew McNeilly said construction costs had risen by 30 per cent in the past 10 months.

Then there was a Melbourne developer that abandoned plans to build a $500 million apartment tower on the Gold Coast, blaming the crisis in the building industry and surging construction costs for making the project unprofitable.

The development by Central Equity was set to kick off this year featuring 486 apartments in a 56-storey tower, known as Pacific One, and was due to be built on a beachfront block in Surfers Paradise.

Apartments had been sold with a starting price from $650,000 each.

Overall, the construction industry has been plagued with a spate of collapses caused by a perfect storm of supply chain disruptions, skilled labor shortages, skyrocketing costs of materials and logistics, and extreme weather events.

Earlier this year, two major Australian construction companies, Gold Coast-based Condev and industry giant Probuild, went into liquidation.

Then there have been smaller operators like Hotondo Homes Horsham – a franchisee of a national construction firm – which collapsed earlier this month affecting 11 homeowners with $1.2 million in outstanding debt.

It is the second Hotondo Homes franchisee to go under this year, with its Hobart branch collapsing in January owing $1.3 million to creditors, according to a report from liquidator Revive Financial.

Snowdon Developments was ordered into liquidation by the Supreme Court with 52 staff members, 550 homes and more than 250 creditors owed just under $18 million, although it was partially bought out less than 24 hours after going bust.

Others joined the list too including Inside Out Construction, Solido Builders, Waterford Homes, Affordable Modular Homes and Statement Builders.

*Name withheld for privacy reasons

Read related topics:BrisbaneCost Of Living

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Can we solve Australia’s housing crisis? Ambitious plan launched to eradicate rental stress and lower homeless rate

Suburbia

Homelessness Australia has launched an ambitious plan to solve the housing crisis in Australia.

The plan would halve the number of residents experiencing rental stress within five years and end it in 10 years.

It would also halve the number of people repeatedly turning to homeless services for help.

They are calling on state and federal governments to invest in 50,000 homes a year.

This would include investing 25,000 affordable rental properties every year for low-income earners, and another 25,000 social housing properties.

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Big four bank customers hit by $70k ‘loyalty tax’ by rising interest rates, research finds

Big four bank customers hit by $70k 'loyalty tax' by rising interest rates, research finds

Australian homeowners are being slugged with an extra $70,000 over the life of their loan by staying loyal to the big four banks and failing to refinance, new research has found.

It also revealed that the big four banks are raking in $4.5 billion each year as a result of the “loyalty tax” as the Reserve Bank of Australia’s (RBA) super-sized rate hikes are passed on to existing customers.

The RBA has raised interest rates from a record low of 0.1 per cent to 1.35 per cent since May.

The big banks are offering lower interest rates to attract new customers, the research from mortgage broker Lendi showed, while current homeowners are smashed by interest rate rises yet could make huge savings by switching home loan providers.

Lendi’s data showed that at the big banks existing customers are slugged an extra 0.91 per cent on interest rates compared to the offers for new customers.

This means at a big bank, customers are paying an interest rate that is 0.91 per cent higher – forking out an extra $70,000 over the life of a $500,000 loan.

Overall, the whole banking sector is charging current customers interest rates that are 0.86 per cent higher compared to new clients.

On Friday, ANZ Bank announced it would reduce standard variable interest rates for new customers refinancing to the big bank by between 0.1 and 0.5 per cent, yet it passed on the 0.5 per cent hike from July to existing customers.

Lendi chief executive David Hyman said when customers special fixed rates finish, most would not revert to the best available rate.

Instead, he advised customers to call their banks to ask for the same deals as new customers.

Record levels of refinancing

But a record 332,000 Aussies refinanced their properties in Queensland, New South Wales and Victoria in for the 2021/22 financial year, up 29 per cent on the previous 12 month period, according to the latest analysis released by digital settlement provider Pexa Insights.

Victoria recorded the highest volume of refinancing at 131,000 up by 23.7 per cent year-on-year followed by NSW with 127,600 an increase of 25.8 per cent year-on-year.

QLD experienced the highest growth in refinancing with 73,000 up 49.8 per cent for the last financial year.

All three eastern states recorded in excess of 150,000 new residential loans each, with QLD leading the way again with 160,000 home loans completed in the last financial year.

More than 472,300 new home loans were taken out across the eastern states with Victoria posting the highest growth in both new residential loans with 157,660 loans up 10.4 per cent year-on-year.

Mike Gill, Pexa Insights’ head of research, Mike Gill, said initially Australians were taking advantage of record low interest rates to refinance.

“There is now a clear correlation between the high numbers we saw during the financial year 21/22 and the Reserve Bank of Australia’s determination to lift interest rates twice before the close of the financial year,” he said.

“The record levels of new loans coincide with the strong buying and selling activity witnessed throughout the first half of the financial year 2022, in particular in Queensland which has experienced a state-based property boom across home buying and selling.

The race to attract new customers has become “highly competitive” between major and non-major banks for new loans across all three eastern states, he added.

“However, non-major banks recorded higher win/loss numbers for refinances in the same regions,” he said.

“Strong competition within the lending market can only lead to positive outcomes for consumers.”

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Mark Bouris reveals five tips to safeguarding money as inflation soars

Mark Bouris reveals five tips to safeguarding money as inflation soars

Inflation will very likely hit 7 per cent by the end of 2022, which means there’s more than a fair chance there will be further interest rate hikes passed on to you the borrower before the end of the year, as the RBA attempts to rein spending in order to keep inflation in check.

This is not good news, but there’s no way the Reserve Bank could sit back and do nothing.

We’ve all benefited from cash rate lows of 0.1 per cent. But with it now at 1.35 per cent, a jump that has happened in just three months, you can bet that there’s more to come.

As that rate is passed on to anyone who’s borrowed money and doesn’t have a fixed rate, what can you do to safeguard your investments and where should you place your cash?

1. Think long-term, not short-term

If you have a thoughtful, long-term investment strategy, there’s no need to “chop and change” it just because interest rates are going up.

The worst mistake you can make as an investor is selling when the market has bottomed out or make rash decisions that could result in you missing out on potential returns. A lot of Australians who took the opportunity to withdraw money from their super funds when Covid first hit, missed out on one of the best years for super returns.

If you’re looking to invest for the next 10 to 20 years, it’s best to ride out the interest rate hikes that are coming our way.

That said, if you have a shorter-term “investment horizon”, maybe close to retiring, it may make sense to be more cautious and reduce your exposure to “riskier” assets such as shares.

2. Build up your cash savings

Holding cash deposits in the bank as interest rates rise could be a safe option that will generate some income.

Having six to 12-month Term Deposits are a safe option for those with available funds, with some saving accounts offering higher rates if funds are deposited into them on a regular basis.

Be sure to shop around for the best deal as returns vary wildly between institutions. And before committing to a term deposit, it’s wise to consider your other investment objectives during the time the money will be locked away.

3. Property

Although property is more vulnerable to rising interest rates, some of these investments could benefit.

Rising inflation could be good news for property investors as it could lead to higher rents, which in turn could generate large enough returns to offset the negative effect of higher interest rates. Tight leasing markets and the prospect of higher yields and long-term capital gains should sustain interest in investment properties, despite rising interest rates.

With vacancy rates at an all-time low, now could be a good time to offset interest rate rises by buying more investment properties that will yield great cash flow.

As borders have opened up, we’ve seen an increase and influence of expatriates returning home. Add to this a drop in construction approvals and the government ramping up migration to assist the economy post-Covid – rents will continue to increase significantly in many locations over the next few years, helping to reduce the impact of the rate rises.

It pays to speak to a professional mortgage broker who can help make an assessment of your options with regards to repayments and future lending.

4. The Share Market

Always a riskier proposition but potentially some of the highest returns.

Keep in mind that past performance is not a reliable indicator of future performance and great care is needed when making share selections.

Many people seek the assistance of an experienced investment adviser to do this for them.

5. Bonds

Fixed income assets, such as government and corporate bonds are often seen as providing a relatively stable and reliable return.

When purchasing a government bond, you are essentially lending money to the government which they will pay you back with interest. The interest is paid to you in regular facilities throughout the length of the bond.

Fixed income assets could be considered boring by some investors but having them as part of your investment portfolio can help to offset ant losses you may have had from the share market – hence their classification as a “defensive” asset.

…and a thin red line

All the things I’ve mentioned above are food for thought at one end of your balance sheet, but don’t forget what’s going out at the other end.

My mum used to say, “Take care of your pennies and the pounds will take care of themselves.” Like most motherhood statements, this one is true and makes for good practice right now.

I’m making a list of those ongoing subscriptions I’ve picked up over the last few years and unnecessary money I’m spending in the cloud. It’s a leaner time now and I’m drawing a red line through those that I don’t need or can do without. I suggest you do the same. Make it a habit, not just something to do when times get tough.

There’s a famous Rudyard Kipling poem called If that begins with the words, “If you can keep your head when all about you are losing theirs…” Right now, it’s time to hear those words. Don’t lose your head, keep it sane, simple, straightforward and you’ll come out the other side of this.

Mark Bouris is the Executive Chairman of Yellow Brick Home Loans, for more information on getting the best home loan, refinancing and some of the industry’s leading experts tips visit the Y Home Loans website

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Australian house prices fall at ‘fastest rate’ since 2008 financial crisis

Four photos of properties are placed in a grid, with a red silhouette of a house saying 'SOLD' and a key.

House prices in Australia are dropping at their fastest pace since the global financial crisis — and market conditions are “likely to worsen” as interest rates continue to rise, according to property analytics firm CoreLogic.

The latest data shows that the nation’s median property value has dropped by 2 per cent since the beginning of May, to $747,182 (a figure which includes houses and apartments).

“Although the housing market is only three months into a decline … the rate of decline is comparable with the onset of the global financial crisis (GFC) in 2008, and the sharp downswing of the early 1980s,” said CoreLogic’s research director Tim Lawless.

But he noted that, on average, prices had jumped 28.6 per cent from mid-2020 (the low point of the housing market during the COVID-19 pandemic) to April 2022 (when national prices hit their peak).

Regional Australia had an even bigger surge, with prices up 41.1 per cent in two years — as smaller towns outside the capital cities experienced a huge influx of city-dwellers seeking better lifestyles (as working remotely became the new normal).

“In Sydney, where the downturn has been particularly accelerated, we are seeing the sharpest value falls in almost 40 years.”

A table showing that Australia's median property price dropped 1.3 per cent in July 2022 to $747,812.
Property prices in Sydney, Melbourne and Hobart fell sharply in July.(CoreLogic)

The median price in Australia’s most expensive city fell by 2.2 per cent in July (taking its quarterly loss to 4.7 per cent). Despite that, an average house in Sydney still costs around $1.35 million, while an average unit may fetch about $806,000.

Melbourne and Hobart also recorded steep falls, with prices in both cities down 1.5 per cent last month, while Canberra prices dropped 1.1 per cent.

Prices in Brisbane and regional Australia fell 0.8 per cent (their first monthly decline since August 2020).

At the other end of the spectrum, Darwin, Adelaide and Perth were the only capitals where prices actually went up in July (by between 0.2 and 0.4 per cent). However, it has been a sharp slowdown since May, when the Reserve Bank began to aggressively lift the cash rate from its record low levels.

short and sharp

“I think this downturn will be similar to the global financial crisis in that it will be quite short and sharp,” Mr Lawless told ABC News.

Australia’s median property price fell by around 8.5 per cent over an 11-month period during the GFC, according to CoreLogic.

Line graph showing Adelaide property prices jumped 3.6 per cent in the past three months, while Sydney prices fell 4.7 per cent.
Adelaide property prices jumped 3.6pc in the past three months.(CoreLogic)

Mr Lawless said the property downturn is “accelerating”, and that he would not be surprised if “the current decline gets worse than what we saw during the GFC”.

He noted the main difference is that governments and central banks are currently determined to withdraw trillions of dollars worth of stimulus, in a desperate bid to lower inflation (instead of pumping it into the global economy, liked they did after the 2008 crisis).

Many analysts are predicting Australian property prices, on average, will fall between 10 and 20 per cent (from peak to trough) — with the two most expensive cities Sydney and Melbourne likely to suffer the biggest declines.

But even if the worse case scenario eventuates, it will not drastically improve housing affordability.

“If we saw say, a 15 per cent drop in national housing values, it would take prices back to where they were in about April 2021.”

How quickly (and by how much) prices fall will depend on how aggressively the RBA decides to lift its cash rate target in the next few months.

Graph showing that house rents have risen sharply in every capital city, with Brisbane jumping 13.6 per cent in the past year.
Brisbane and Adelaide tenants are experiencing the sharpest rent increases.(CoreLogic)

Since May, the RBA has lifted its cash rate target from 0.1 to 1.35 per cent.

If the central bank delivers another double-sized rate hike on Tuesday (0.5 percentage points), as widely expected, that would bring the new cash rate up to 1.85 per cent.

Buyers’ market and surging rents

“The market has moved to being very much more in favor of buyers over sellers now, especially in markets like Sydney and Melbourne,” Mr Lawless said.

“Buyers are getting back in the driver’s seat. They have more choice, and there’s less urgency.

“But for sellers, it means they need to be much more realistic about their pricing expectations, and they should expect there’s going to be more negotiation.”

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Economy: Winners of rising interest rates revealed

Economy: Winners of rising interest rates revealed

Homeowners and renters are bracing for more bad news with interest rates tipped to rise again, but there are some people who are benefiting more than others.

Household budgets are being stretched to their limits after inflation hit a massive 6.1 per cent and cost of living pressures, including the prices of groceries and fuel, continue to mount.

But financial experts say some parts of the community are enjoying economic success during this difficult time.

So who are the winners of rising interest rates?

Financial planner and Edith Cowan University lecturer Damon Brown told NCA NewsWire there were two big winners — withdraw and people who locked in fixed rates before the cycle changed.

“Retires who are invested in cash have been doing it tough for the past five years because interest rates on their cash have been very low and below what Centrelink deems them to be earning,” he said.

“For the older people Centrelink deems them when it comes to their the age pension they can receive.

“So it’s called deeming, which is what the Centrelink assumes they can earn from their money, but they might not actually earn that money.

“An example might be my mother who invests all her money in cash. She’s been receiving one per cent interest rate for the last few years but Centrelink assumes that she earns a bit more than that. And so she’s receiving less Centrelink entitlement.”

Mr Brown said people who locked in fixed rates before the cycle changed, like him and his wife who secured a rate just under two per cent, were also doing well.

“We actually locked in for three years a year ago, so we’ve still got another two years to take the big difference,” he said.

Daniel Kiely, a senior research fellow at the Bankwest Curtin Economics Center, told NCA NewsWire rising interest rates were not necessarily a bad thing.

“If the increase in interest rates that we are seeing both in Australia and in other global jurisdictions flow through to the economy, and in turn lead to lower inflation, we will all be winners in the long-run.” he said.

“Lower inflation will make it more unlikely for a global recession to occur.”

In the shorter-term, Dr Kiely said savers would get higher returns on their savings accounts, but the speed at which this occurred would vary from bank to bank and depending on the type of savings account.

“Withdraw may benefit too, if savings supplement another source of income such as a pension,” he said.

“However, for savers and retirees to see the full benefit of such returns, inflation will need to come down substantially.”

Dr Kiely said there was a double edge sword for potential homeowner investors.

“Higher interest rates may stem house price increases and help those saving for a home,” he said.

“But, higher interest rates will also reduce borrowing capacity for many wishing to enter the housing market.”

LCI Lending partner Domenic Romeo said there were still more losers than winners.

“However, the people who have savings in a term-deposit or savings account will benefit from higher interest income rates,” he said.

“Some property investors may find themselves in a better position to purchase a property, due to the softening property prices too.”

In this month’s Finder RBA Cash Rate Survey, 26 experts and economists agreed the cash rate would change on Tuesday, with 23 of them predicting another increase of 50 basis points.

That would bring the cash rate to 1.85 per cent in August.

“A 50 basis point rate increase will see the average Aussie homeowner forking out an additional $610 per month compared to what they were paying four months ago,” Finder’s head of consumer research Graham Cooke said.

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Inflation: NYC shop Duane Reade locks up Spam in antitheft cases

Inflation: NYC shop Duane Reade locks up Spam in antitheft cases

It’s the nation’s crises in a can.

Inflation and crime have gotten so bad in New York that even cheap meat like Spam has to be locked up, the New York Post reports.

At Duane Reade’s store in the Port Authority bus station, the shelf-stable product — only $US3.99 ($5.70) a can — is now being stocked in plastic, antitheft cases.

“I’ve never seen that before!” one cashier laughed while using a magnet to remove a can of Spam from its cage from him.

The cashier was among the employees, tourists and store regulars stunned that the iconic blue-and-yellow cans are now being kept under lock-and-key — some even poking fun at the sight as “a sort of Jeff Koons homage,” per one viral tweet.

Jenny Kenny, 43, who was visiting from Kentucky, was aware of the ongoing crime waves hitting cities like New York and San Francisco, but still couldn’t believe the sight of “so many things in boxes.”

“Some of these things are pretty ridiculous,” she said.

As prices and crime skyrocket, New York City stores have taken to locking up staples like toothpaste and soap to prevent crooks from stealing and then hawking the products on the sidewalk or online marketplaces like Amazon and eBay.

Yet some shoppers were confused why Spam, along with $US1.89 cans ($2.70) of StarKist tuna, was enclosed under plastic, while pricier foodstuffs like $US5.49 cans ($7.86) of Amy’s soup sat unencumbered.

“To put Spam in a cage is stupid — and kind of insulting to the customers that would buy it,” said shopper Dennis Snow, 46.

Snow said he doesn’t think Spam is being stolen to “sell it for crack,” but rather because the homeless in the area are looking for a quick and easy meal.

“Someone is stealing this because they need it,” agreed Delia Kemph, a 28-year-old teacher.

Employees at the store said thefts have been surging over the past two-plus years, with one estimating a minimum of four shoplifters every evening shift.

“I don’t think they stop anything,” Iggy, 21, a store clerk, said of the antitheft cases. “It’s security theatre. If you really needed it, you would stomp on it.”

The employee’s complaints were prescient — at around 7pm on Thursday, a man in a black tank top and gray sweatpants had an employee unlock the glass case for a $US38 ($54.40) electric razor, and then bolted with the appliance past a yellow-shirted security guard and out the door.

With inflation out of control — the consumer price index spiked 9.1 per cent in June compared to a year ago, even as President Joe Biden this week refused to acknowledge the nation is in a recession despite the economy contracting two quarters in a row — emboldened thieves have found a ready market for discounted stolen goods among recession-weary consumers.

Petty theft complaints for the New York Police Department’s Midtown South Precinct, which includes the Port Authority bus terminal, have shot up 52 per cent — to 1,771, through July 24 — compared to the same period last year.

Hormel CEO Jim Snee told analysts last month that prices for their legacy product were set to increase in late July to cover increased transportation, packaging and meat costs.

A spokeswoman for Walgreens, which owns Duane Reade, refused to say why Spam was locked down at this particular location, and that installing antitheft devices is done “in response to theft data.”

Liz Tawfik, 57, a home health attendant, complained that the added security measures are hampering the once-smooth shopping experience — and annoying customers like herself.

“If you’re gonna catch a train you wanna grab something quick, it’s not quick anymore,” she said. “You might as well have someone take your order at the door and get what you want.”

Not all drug stores have put Spam under lockdown.

Two other Duane Reades and a pharmacy in the Times Square area, along with two other stores in Central Harlem, sold their cans of Spam, cage-free.

Dariel Cepin, 23, an employee at a West 44th Street Duane Reade, said, “Here, we lock up ice cream.”

This article originally appeared on NY Post and was reproduced with permission

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