Three in four willing to cut lifestyle spending to afford a home
Australian homebuyers are among the most willing of the five markets surveyed to make sacrifices for a home, with three in four having cut or planning to cut lifestyle spending, according to property data firm Cotality. The findings come as housing affordability remains stretched and all four major banks tip a September rate rise.
Cotality's Q2 2026 Consumer Sentiment Report surveyed recent and prospective buyers in Australia, New Zealand, the US, Canada, and the UK.
The 4.9% magic number
Asked what mortgage rate would draw them into the market, Australian respondents named a median of 4.9%. That matches New Zealand and sits above the 4.5% median across all five markets.
Across the survey, prospective buyers were more rate-driven than recent buyers. Some 30% of future buyers said a specific rate would be their signal to apply, compared with 20% of recent buyers, who were more often prompted by life events.
That wait-and-see stance is showing up in lending activity. Equifax data has tracked months of falling mortgage demand, with applications down 14.1% year on year in August 2026, a fifth straight monthly decline, and first-home buyer applications down 20%.
Cotality chief economist Selma Hepp (pictured left) cautioned that holding out for a target rate carries its own cost.
"It's expensive to buy a home. But so is renting," Hepp said.
Buyers reshape the loan, not just the budget
Beyond the household budget, Australian buyers are also reworking the loan itself. Some 63% would take a smaller mortgage and 57% would settle for a smaller home, both slightly below the five-market averages of 65% and 59%. A further 58% would pursue a no-cost or smaller refinance to reduce their debt, just above the 57% average.
Across the Tasman, buyers were even more flexible, with 68% open to a smaller mortgage, the highest of any market, and 78% willing to cut lifestyle spending. The report also found nearly one in three buyers across the two countries are unsure whether they can cover upfront purchase costs at all.
Cotality found a consistent order to these trade-offs. Discretionary spending goes first, loan structure next, and the size of the home last.
Younger buyers bend furthest
The willingness to compromise rises sharply among younger buyers. Across the five markets, 78% of Gen Z buyers would cut lifestyle spending and 74% would accept a smaller home, compared with 50% and 43% of Baby Boomers.
Cotality chief commercial officer Lisa Jennings (pictured right) said "the next phase of demand may depend less on when rates fall" than on how well buyers have adjusted to current conditions.
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