Soaring mortgage and rental prices are causing penny-pinching South Aussies to tighten the purse strings and cut down on more discretionary spending, experts say.

According to the Australian Bureau of Statistics data on household spending, South Australia has experienced the biggest drop of any state over the past month of any state.

Its average household spend dropped 0.1 per cent over the past month – equal with the ACT and second only to the NT where their spend dropped by 2.3 per cent.

According to the data, monthly spend on alcoholic beverages and tobacco dropped 1 per cent and clothing and footwear spend was down 1 per cent.

The average spend on furnishings and household equipment was down by 1.6 per cent, while households saved 0.5 per cent on the previous month’s spend on recreation and culture.

In what will come as a blow to the state’s tourism and hospitality industry, spend on hotels, cafes and restaurants was also down by 1.8 per cent.

Despite the cutbacks in some areas monthly spend on petrol remained unchanged and, possibly reflecting an increase in living costs, spend on food was up by 0.4 per cent, health 0.8 per cent, and miscellaneous goods and services 3.1 per cent.

Harris Real Estate managing director Phil Harris. Picture: Supplied

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Harris Real Estate managing director Phil Harris said household spend was “unquestionably” being impacted by housing cost pressures.

“The household squeeze is putting pressure on more optional purchases for household incomes,” he said.

“People are being pushed to the absolute limit.

“We still have the same dynamics with the undersupply of property and relative strong interest in it, and people are being forced to literally pay more or not buy a home.

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“A lot of people are making plans to cut back for a year or two on some discretionaries so they can pay another $10,000 to $15,000 in order to secure a property.

“For most people, they can’t physically save for a property without making some cutbacks.”

He said there were some green shoots, however, with value growth tempering in recent months.

Adelaide residents are feeling the pinch. Picture: Brenton Edwards

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

He said people could save money and reduce the length of their loan by reviewing their finances.

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“Most home loans are structured around monthly repayments,” he said.

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

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

Finch Financial chief executive and mortgage expert Julian Finch.

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Mr Finch said property owners should take immediate steps to strengthen their financial position before further rate increases.

“Review your loan, build buffers, consider repayment frequency and seek professional advice. The borrowers who act early will be the ones who stay ahead.”

He said while the outlook may appear challenging, disciplined and informed borrowers can still get ahead.

“When it comes to paying off your home loan faster, it’s rarely about dramatic changes,” Finch said.

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