A new review has labelled the nation's approach to housing affordability as useless, and comes amid growing cost pressures on households.
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The Productivity Commission said existing agreements to create more affordable housing were "ineffective", claiming an overhaul in policy is needed to address issues within the private and public housing sectors.
Its report has coincided with further revelations that inflation is expected to remain high over the coming months. It also comes the week before of another expected 50 basis point hike in the cash rate by Reserve Bank.
Households are already facing additional pressure following the ending of the fuel excise reduction on Wednesday.
Treasurer Jim Chalmers said the competition watchdog would be keeping a hawkish eye on fuel retailers hiking prices beyond the going rate for petrol.
Commissioner Malcolm Roberts said the National Housing and Homelessness Agreement had not fixed affordability and recent price hikes would push more on public and social housing waitlists.
"With the private market becoming less affordable, demand for homelessness services and social housing is rising," he said.
"Over the life of the NHHA, housing affordability has deteriorated for many people, especially people renting in the private market. The median low-income renter spends over a third (36 per cent) of their income on rent. About one in five low-income households are left with less than $250 after paying their weekly rent."
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Housing Minister Julie Collins blamed the previous government, saying a decade of "policy inaction" has created significant challenges for the sector.
"The Albanese government has an ambitious housing reform agenda to increase supply and improve affordability through the establishment of a National Housing Supply and Affordability Council and the development of a National Housing and Homelessness Plan," Ms Collins said.
"The findings from this report will help inform the design and implementation of these reforms. We are also taking immediate action to address housing challenges."
Mortgage holders will also see a pinch to their bank accounts in the coming week, with a possible sixth 50 basis point rate hike adding roughly $222 additional in interest repayments to a $750,000 loan.
The cash rate is currently sitting at 2.35 per cent, but market expectations are that the main monetary policy lever will rise to around 3.5 per cent by the start of next year.
The most aggressive rate hikes from the RBA since 1994 have been spurred on by inflationary pressures caused by major global supply constraints from the pandemic and commodity shocks sparked by the war in Ukraine.
New monthly inflation figures from the Australian Bureau of Statistics showed the consumer price index in August rose 6.8 per cent, which is slightly below the July figure of 7 per cent.
Annual inflation is expected to peak in December at 7.75 per cent according to Treasury. However overseas central banks such as the US Federal Reserve and the European Central Bank are expecting higher levels of inflation to persist.
Dr Chalmers conceded price rises were outstripping wage growth.
"There's no sugar coating the fact Australians right now are doing it tough, with falling real wages, rising prices, and higher interest rates," he said.
"That's why the Budget we deliver in less than four weeks' time will provide responsible cost-of-living relief that Australians deserve in a way that doesn't put extra pressure on inflation and interest rates."
Income figures published by the ABS on Thursday also showed household savings fell $484 billion, or 3.3 per cent over the June quarter. It is the first time wealth has fallen since the start of the pandemic.
"This is the first quarterly fall in household wealth since the beginning of the pandemic, and coincides with increased cost of living pressures and rising interest rates," ABS head of finance and wealth, Katherine Keenan said.
"Falling superannuation balances contributed 1.7 percentage points to the 3.3 per cent decline in household wealth. This reflected the large price falls in domestic and overseas share markets."
