SA is leading the country in reducing household costs amid the housing crisis

Rising mortgage and rental prices are causing South Aussies to tighten their belts and cut spending more prudently, experts say.

According to data from the Australian Bureau of Statistics on housing consumption, South Australia had the largest decline of any state in the last month of any state.

Average household consumption fell by 0.1 per cent last month – equal to the Act and second only to the NT where consumption fell by 2.3 per cent.

According to the data, monthly consumption of alcoholic beverages and tobacco decreased by 1 percent and the cost of clothing and footwear decreased by 1 percent.

Average spending on furniture and household items fell by 1.6 percent, while households saved 0.5 percent on last month’s spending on entertainment and culture.

In what will come as a shock to the government’s tourism and hospitality industry, spending on hotels, cafes and restaurants also fell by 1.8 percent.

Despite reductions in some areas, monthly consumption of fuel was unchanged and, possibly reflecting the increase in the cost of living, consumption of food increased by 0.4 percent, health by 0.8 percent, and miscellaneous goods and services by 3.1 percent.

Harris Real Estate managing director Phil Harris said housing consumption was “undoubtedly” being affected by housing cost pressures.

“The pressure on the home is putting pressure on the purchasing options for income,” he said.

“People are pushed to the absolute limit.

“We still have the same energy and poor supply of property and strong interest in it, and people are forced to pay more or not buy a home.

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“A lot of people are making plans to cut a year or two off for someone to pay an extra $10,000 to $15,000 to get a property.

“For most people, they can’t save space without reducing something.”

He said there are green shoots, however, that have increased in value in recent months.

Adelaide residents feel good. Photo: Brenton Edwards

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Finch Financial CEO and founder Julian Finch warned continued inflation and frequent interest rate hikes could wipe out much of the progress households have made over the past two years.

He said that people can save money and shorten the term of their loan by reviewing their finances.

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“Most home loans are scheduled to be paid every month,” he said.

“When borrowers switch to weekly payments, they pay effectively 52 per year, which is equivalent to paying 13 months instead of 12.

“That extra month happens quietly but over time, it has a big impact on how quickly the loan goes down.”

Finch Financial CEO and real estate expert Julian Finch.

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Mr Finch said property owners should take immediate steps to strengthen their financial situation before the tax increases.

“Review your loan, build buffers, consider repayment periods and seek professional advice. Borrowers who act early are the ones who stay ahead.”

He said that while the idea may seem challenging, disciplined and savvy borrowers can go ahead.

“When it comes to paying off your mortgage quickly, there are rarely any big changes,” Finch said.

“It’s about consistent, smart decisions that come together over time.”