2013 will be the ‘year of living frugally’ in Australia

Rising utility costs, uncertainty over employment and a lack of confidence in the global economy will make 2013 a year of frugal living for Australians, according to the ninth annual National Consumer Sentiment Survey from Mortgage Choice.

December 06, 2012

Rising utility costs, uncertainty over employment and a lack of confidence in the global economy will make 2013 a year of frugal living for Australians, according to the ninth annual National Consumer Sentiment Survey from Mortgage Choice.

The online survey conducted by Australia's largest independently-operated mortgage broker uncovered the major concerns; financial plans; housing market outlook; and more, of 1,025 consumers.

The national survey findings released today found that Australians will tighten their belts in 2013 by reducing their spending and looking for other avenues to save money.

Head of Corporate Affairs at Mortgage Choice, Belinda Williamson said, “Our annual Consumer Sentiment Survey has found that Australian residents are not feeling overly confident about 2013, mostly due to external factors beyond their control. As a result, people are taking a more frugal approach to their finances and are working towards proactive steps to change their situation for the better.”

The survey found that rising utility bills were the greatest concern for most consumers (22% of respondents). Equally in second place were concerns over job security, the state of the global economy, economic management at a Federal Government level (11% each) and rounding out the top five responses was other costs of living such as clothing, insurance, etc (10%).

To cope with the rising cost of living, more than half (55%) of those surveyed claim they have dipped into their savings to help make ends meet.

“The much publicised increase in the cost of utilities seems to be hitting every one hard and this survey suggests that Australian's overall are not feeling any more optimistic about their ability to meet these costs in 2013. With job security and the economic outlook also weighing on the minds of Australians it is understandable that people are tightening their belts,” said Ms Williamson.

“We encourage those who are feeling the pinch to look at practical ways to positively impact their financial outlook for the year ahead, such as health checking your home loan to see if you can get a better deal or by making changes to your daily spending habits.”

More than half (52%) of those surveyed plan to make changes to their financial situation in 2013, by reviewing their budget, cutting back on spending and/or reviewing their home loan.

Ms Williamson continued, “While confidence levels are fairly low, it is good news that people are seeking to take greater control of their finances and to change aspects that are within their control such as reducing unnecessary outgoings and ensuring they are getting a competitive home loan deal.”

Confidence in the economy

When gauging their confidence in the Australian economy for 2013, the findings show:

  • 51% of respondents were fairly or very confident (56% in 2011 and 75% in 2010);
  • 27% were worried about the state of the economy (24% in 2011 and 12.5% in 2010); and
  • 22% were neither worried nor confident (19% in 2011 and 12.5% in 2010).

“Confidence in the Australian economy for the year ahead has dipped slightly year-on-year but it is pleasing to see more than half of all those surveyed still see a positive economic outlook for 2013. In fact, 59% of the state said that the financial market turmoil has influenced them to save more, which is encouraging for their long term financial plans,” said Ms Williamson.

Making financial changes in the coming year

When asked how they feel about their level of personal savings, 38% of respondents were unsatisfied.  At the same time last year, 49% felt this way. This year, 32% claimed they were satisfied (almost on par with 2011, at 30%) and 30% were neutral (compared to 21% last year).

More than one third (36%) of those surveyed were saving money to protect themselves against unexpected changes to their finances, while 32% were saving money for a holiday and making up the top three, 30% of respondents were saving for day to day living expenses.

“What is apparent from the research is that people are building up their reserves so they are better positioned to cope with unexpected changes in their financial situation. Spending on holidays is important to many Australians so we would expect that savings will be made by cutting out more frivolous purchases such as entertainment, and annual events including Christmas,” Ms Williamson said.

Property market confidence in 2013

Almost one quarter (23%) of those surveyed claim they will be more likely to buy property in 2013 if interest rates continue their downward trend. Over the longer term, 39% of people intend to buy a property in the next two years. Of these property buyers, almost one third (30%) will be first homebuyers, 25% will be looking to buy their next home and a staggering 45% will be investors.

“Investor confidence is very good news. With interest rates the lowest they have been for some time and property prices remaining subdued in parts of the country it is clear from the research that many investors feel that this presents a good buying environment in Australia,” said Ms Williamson.

Almost half (47%) of those surveyed believe the Federal Government is not doing enough to encourage affordable housing, 26% said it is doing nothing, 16% were undecided, 10% believe it is doing enough and only 1% feel the Government is doing everything to encourage affordability.

Other key statistics

  • Rental squeeze: 39% of consumers feel tighter rental vacancy rates and/or rising rents is having an effect on property prices in their state and on them personally.
  • Property prices: 34% of those surveyed believe Australian property prices will increase over the next 12 months, 16% believe they will decrease, 34% believe prices will remain stable and 16% don't know.
  • The property purchase process: When asked how well informed respondents were about the property purchase process, 19% were well informed, 33% know the essentials, 35% have some idea and 14% have no idea.
  • The switch to fixed: 45% of mortgage holders will consider switching to a fixed term loan when lenders' fixed rates fall below 5%.
  • Using a mortgage broker: 65% of respondents will consider using a mortgage broker in the future and the top reasons were: 1) Mortgage brokers save me from researching a range of lenders and loans myself, 2) Professional mortgage brokers are experts in mortgage products, and 3) Have had a good experience with a mortgage broker before.

For home loan tips, trends, facts, data and other information, visit Facebook.com/MortgageChoice or Twitter.com/MortgageChoice. Or, call 13 MORTGAGE.


For further information or to arrange an interview, please contact:

Belinda Williamson 
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124 

Alicia Eu 
BlueChip Communication 
(02) 9018 8603 / 0412 550 004

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