2013 will be the 'year of living frugally' in NSW

February 01, 2013
Stuart Ellicott

Mortgage Choice annual Consumer Sentiment Survey findings   Rising utility costs, uncertainty over employment and a lack of confidence in the Australian Government will make 2013 a year of frugal living for New South Welshman, according to the ninth annual NSW 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 228 NSW consumers.  

The state-specific survey findings released today found that those living in NSW will tighten their belts in 2013 by reducing their spending and looking for other avenues to save money.   

Our annual Consumer Sentiment Survey has found that New South Wales residents are not feeling overly confident about 2013, mostly due to external factors beyond their control. As a result, locals 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 New South Welshman (16% of respondents). This is ahead of economic management at a federal level (13%) job security (11%), and rounding out the top five concerns both at 10%, were other costs of living such as clothing, insurance, etc. and the state of the global economy.  

To cope with the rising cost of living, more than half (52%) of those living in NSW 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 those in New South Wales 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.  

We encourage those who are feeling the pinch to look at practical ways to positively impact their financial outlook for the year ahead, by 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 (53%) of those surveyed in NSW plan to make changes to their financial situation in 2013, by reviewing their budget, cutting back on spending and/or reviewing their home loan.  

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:

  • 57% of NSW respondents said that they were fairly or very confident (compared to 59% in 2011);
  • 24% were worried about the state of the economy (compared to 20% in 2011); and 
  • 19% were neither worried nor confident (compared to 21% in 2011). 

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 living in New South Wales still see a positive economic outlook for 2013. In fact, 58% of the state said that the financial market turmoil has influenced them to save more, which is encouraging for their long term financial plans.

Making financial changes in the coming year

When asked how they feel about their level of personal savings, 34% of respondents were unsatisfied.  At the same time last year, 46% felt this way. This year, 36% claimed they were satisfied (almost on par with 2011, at 34%) and 31% were neutral (compared to 21% last year).

More than one third (38%) of those surveyed were saving money to protect themselves against unexpected changes to their finances, while 33% were saving money to pay off their mortgage sooner. Rounding out the top three, Australians were still finding time for leisure with 28% saving for a holiday.  

What’s 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’d expect that savings will be made by cutting out more frivolous purchases such as entertainment and clothing, and annual events including Christmas.  

Property market confidence in 2013

One quarter (25%) of those surveyed in NSW claim they will be more likely to buy property in 2013 if interest rates continue their downward trend. Over the longer term, 43% of people intend to buy a property in the next two years. Of these property buyers, almost one quarter (24%) will be first home buyers, 25% will be looking to buy their next home and a staggering 52% 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 the state of NSW.  

Just over two fifths (44%) of New South Welshman believe the Federal Government is not doing enough to encourage affordable housing, 29% said it is doing nothing, 16% were undecided; 9% believe it is doing enough and only 2% feel the Government is doing everything to encourage affordability.  

Other key NSW statistics  

  • Rental squeeze: 45% in NSW 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: 40% believe NSW property prices will increase over the next 12 months, 13% believe they will decrease, 33% believe prices will remain stable and 14% don’t know.   
  • The property purchase process: When asked how well informed respondents were about the property purchase process, 20% were ‘well informed’, 32% ‘know the essentials’, 34% have ‘some idea’ and 13% have ‘no idea’.   
  • The switch to fixed: 46% of mortgage holders will consider switching to a fixed term loan only when lenders’ fixed rates fall below 5%.  
  • Using a mortgage broker: 67% of NSW 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.   

If you think it is time to buy your first home, upgrade or get into an investment or just get a Health Check on your current loan, please give me a call to discuss any home loan issues.  

Stuart Ellicott.                

About the survey   Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the 2012 Consumer Sentiment Survey. The survey was completed by 1,025 Australians in late November 2012. Note, the figures have been rounded to the nearest whole percentage point. 

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