Buyers bend their budgets, but draw the line on size and location

According to Cotality’s new Consumer Sentiment Report Q2 2026, which also surveyed Canada, the US, the UK, and New Zealand, found Australians were pushing themselves the furthest.

The data showed that three in four Australian buyers were willing to cut lifestyle spending to afford a property, with 75 per cent already having done so or planning to.

It came ahead of a possible September cash rate rise, with the Reserve Bank board meeting again on Tuesday.

Cotality’s chief commercial officer, Lisa Jennings, said the report showed Australian and New Zealand buyers were making some of the biggest compromises of the five markets surveyed.

“They’re cutting spending, buying smaller, and restructuring their mortgages just to get into the market," she said.

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

Jennings said the dream of homeownership hadn’t dimmed, but required a larger compromise and more careful financial planning than in previous cycles.

“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.

Buyers hold onto property goals

Meanwhile, the data found that just 57 per cent of Australian buyers were open to purchasing a smaller home to improve affordability.

According to the data, only a few buyers reported looking in alternative locations for more affordable options, with eight per cent of recent purchasers moving to different areas.

Among those movers, 17 per cent travelled into a different state, territory, region, county, or equivalent market boundary.

Nearly two-thirds, 63 per cent, would take out a smaller mortgage, while 58 per cent would pursue a no-cost or smaller refinance to reduce their debt

Cotality said many buyers were protecting their goals around the property itself, including its size, location, and long-term value, by adjusting around it.

“The house is the load-bearing wall while everything else is the wallpaper. The direction is the same in every market: people who want to own a home are doing more with less,” it said.

“Buyers are also increasingly cutting their initial investment, shouldering mortgage insurance and a larger overall price tag in order to balance competing costs.”

According to Cotality, many buyers had also been trying to keep their deposit smaller to protect liquidity.

“What looks on paper like a financially sub-optimal choice – paying more interest over the life of the loan – is in fact a decision about which kind of certainty matters more,” it said.

A clash of generations

Aside from global differences, the data found a stark contrast in how much each generation was willing to compromise, with older generations least likely to bend.

Gen Z was the most willing to cut on lifestyle spending, take a smaller mortgage or pause their search, and consider a smaller home; Millennials and Gen X sat around the middle of the ranking, while Baby Boomers were less likely to compromise.

Cotality said there were two reasons for the generational split, with the first being that many Baby Boomers were not in the mortgage queue in the same way younger buyers were.

“A meaningful share of Baby Boomers across all markets are downsizing, paying more in cash, or moving sale proceeds from one home directly into another,” it said.

“The second reason is that Baby Boomers, having lived through earlier rate cycles, are pickier about the terms on which they enter the market again. They will wait it out before they will compromise.”