Australians making most sacrifices globally to own a home

The report showed that Australian purchasers are not simply delaying their plans in hope of cheaper finance, but rather that many are resetting the type of home they will buy, the debt they will take on and the amount of cash they retain after settlement.

More than half of Australian respondents, (57 per cent), said they would consider a smaller home to improve affordability, compared with 59 per cent across all five markets.

Further almost two-thirds, 63 per cent, would take a smaller mortgage, while 58 per cent would consider a no-cost or smaller refinance to bring down their debt burden.

Cotality chief commercial officer Lisa Jennings said the survey showed Australian buyers were making substantial changes to retain a foothold in the market.

“Australian buyers are making some of the biggest compromises of any market surveyed. They’re cutting spending, buying smaller, and restructuring their mortgages just to get into the market,” Jennings said.

“Affordability pressures are having a fundamental impact on what buyers are willing to compromise on to get into their own home.”

The research also revealed the depth of the financial challenge facing would-be buyers.

Only 27 per cent of Australians said they could meet upfront housing costs and still feel financially comfortable, while 26 per cent said they could cover monthly repayments without changing their existing lifestyle.

Cotality also found that 28 per cent of recent Australian buyers had moved to another area in search of more affordable housing.

Of those affordability-driven movers, 17 per cent crossed a state, territory, region, county or equivalent market boundary.

Ownership goal remains intact

Jennings stressed that the findings pointed to a buyer cohort that was adapting rather than abandoning ownership ambitions.

“The dream of homeownership hasn't dimmed, but getting there now requires more compromise and careful financial planning than it has in previous cycles,” Jennings said.

The report found Gen Z buyers were the most willing to make concessions across the five markets.

Some 78 per cent said they would cut lifestyle spending to afford a home while 74 per cent stated they would consider a smaller property.

A further 82 per cent said they would take a smaller mortgage or pause their search.

By contrast, baby boomers were the least likely to alter their plans.

Half said they would cut lifestyle spending, 43 per cent would buy a smaller home and 41 per cent would take a smaller mortgage.

Rate expectations still matter

The report also found that interest rates remain a major consideration, with Australian buyers nominating a median mortgage rate of 4.9 per cent as the level that would persuade them to participate in the housing market.

The threshold was 4.6 per cent among recent buyers, 4.5 per cent for future buyers, 4.9 per cent for Gen Z, 4.6 per cent for millennials, 4.5 per cent for Gen X and 3.9 per cent for baby boomers.

However, Jennings said the next phase of market demand may not be determined solely by the timing of rate relief.

“As Australians continue to navigate a challenging affordability environment, the next phase of demand may depend less on when rates fall, but more on how well buyers have adapted to the conditions we’re seeing today,” she said.

Cotality’s wider analysis estimated that buying instead of renting could save buyers $24,000 over 10 years under its modelling assumptions, while the two options became effectively cost-neutral at a mortgage rate of 6.6 per cent.

[Related: Majority of Australians open to AI loan applications]