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It seems many Australians have bid farewell to the days of excessive and frivolous spending as a new era of conservatism takes hold in an environment of global economic uncertainty.

BY MICHAEL YARDNEY

It wasn’t that long ago that most of us were living beyond our means, chalking up credit card debt and treating the equity in our hones as an ATM as we became caught in the grip of mass consumerism.

However a new survey by The Boston Consulting Group (BCG) has revealed that now one in two Australians plan to reduce discretionary spending over the next 12 months and are saving their pennies – just like our parents did in the "good ol’ days".

And this will reflect on their intention to buy property as either a home or investment, which will of course impact on property prices.

According to the survey almost half of us (48 per cent) intend to pull in the purse strings in the coming year, as opposed to only 10 per cent who plan to spend more and 42 per cent who are happy to continue with their current rate of spending.

Interestingly, the BCG consumer sentiment report revealed that the only other two nations who were as reluctant to spend their hard earned cash were the United Kingdom and Greece. Of course since the survey was taken things have taken a turn for the worse economically.

While this increasing tendency to save rather than spend will leave retailers with a bitter taste in their mouth and lead to tough times in what is already proving to be a very slow period for that sector, it’s good news for the overall economic health of Australia and for the average Australian’s home budget, which will be in better shape to handle any speed bumps in the economy or future increases in interest rates.

One side effect of lower consumer spending will be to help keep inflation under control which in turn will reduces the likelihood of interest rates rising in the near future, providing homeowners and property investors with some breathing space as we head into uncertain economic times.

Of course the question remains – will this desire to save catch on and continue into the future, given our underlying love of spending?

According to James Goth, leader of BCG’s consumer practice in Australia and New Zealand, their research highlights a shift in values from "conspicuous consumption to conscientious consumption".

"It’s not just about the hip pocket, it’s about it being ethical to not waste money and those that are spending up are doing so for ethical reasons, rather than for status," he says.

"The GFC (global financial crisis) has led to a shift in attitudes in spending and an element of that is a shift from carefree spending."

Of the 1400 Australian respondents to the survey, 47 per cent admitted to being directly impacted by the GFC and 45 per cent said they felt anxious about the future.

While this number is smaller than those affected overseas, it has turned us into a nation of savers, rather

than spenders. And not surprising really, given that media reports of troubled property markets, rising cost of living and unstable overseas economies are bombarding us daily.

While our property markets have slowed down, they haven’t stopped – we’re still moving house because we’re still getting married, having babies or getting divorced. And savvy investors are still buying properties, but fewer people are doing so and that’s reflecting in fewer property sales and flatter prices.

It’s just the current stage of the property cycle and this too shall pass. But in the meantime, smart property investors with a long-term focus are taking the opportunity to buy counter-cyclically, a proven property strategy that has created substantial property fortunes for savvy investors.

And as the economic woes gather pace around the world and the stock markets tumble, it’s likely that more investors will look for a safe haven for their money, and put it into property. After all that’s what they did after the GFC in 2008 and the great stock market crash of 1997.

Michael Yardney is the director of Metropole Property Investment Strategists, a best-selling author and one of Australia’s leading experts in wealth creation through property. Subscribe to his e-magazine at www.propertyupdate.com.au.