Australians are quietly pulling back from big-ticket home upgrades and renovations, with new data revealing a shift towards “micro-indulgences” as household budgets come under strain.
Data from global data and technology company, Experian, shows consumers are increasingly deferring major spending decisions tied to property, opting instead for smaller, feel-good purchases and experiences.
The trend, often referred to as the “lipstick effect”, suggests households are trading down rather than switching off discretionary spending altogether — a shift that could have ripple effects across the housing sector.
Households are spending more on cosmetics as housing costs start to bite. Picture: Pema Tamang Pakhrin.
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Big-ticket expenses such as renovations, furniture overhauls and home upgrades are being pushed down the priority list, with Aussies instead funnelling money into more manageable indulgences — from beauty and dining to travel and digital subscriptions.
Experian’s latest Business Pulse Monthly report found personal care spending remains strong, with its index reaching 131 per cent in December 2025, while cosmetics surged to 220 per cent — highlighting the resilience of smaller discretionary categories.
Meanwhile, spending on digital goods, including streaming, gaming and software subscriptions, has jumped significantly, pointing to the growing appeal of low-cost “escapes” as financial pressure builds.
New data shows Aussies are spending more on streaming services, but less on housing goods and renovations. Photo by Chris Delmas.
Travel is also holding up, with airline spend climbing sharply, suggesting households are still prioritising experiences even as they tighten budgets elsewhere.
While house prices in key cities continue to rise, the pullback in large discretionary spending raises questions about how long households can sustain both mortgage repayments and major home-related outlays.
Experian A/NZ head of analytics consulting and insights Louis Tsang said the data reflected a deeper behavioural shift.
“What we’re seeing is a reshaping of discretionary behaviour,” Mr Tsang said. “When budgets are under pressure, many households defer larger purchases and redirect towards smaller, more manageable indulgences that still deliver emotional value.
“For many businesses, the opportunity is in recognising where demand is proving more resilient, often in lower-ticket categories that feel rewarding and ‘worth it’.
A new report shows Aussies are swapping home improvements for cosmetics and streaming services as the cost of living starts to bite.
The latest CommBank Household Spending Insights (HSI) showed a rebound in household spending in March, but that was mainly driven by an increase in petrol prices.
“As expected, the sharp March lift in household spending reflects higher petrol prices as a result of the conflict in the Middle East,” CBA head of Australian economics Belinda Allen said.
“Of the 2.9 per cent lift in the month, over half was contributed from transport alone. Spending at petrol stations accounts for well over half of the category, with spending up around 45 per cent in the month.”
Ms Allen said CommBank expected household spending to slow in the months ahead as household disposable income growth weakened.
“The outlook for consumers will be critical to the path of interest rates beyond May,” she said.
The rising cost of housing and living in general is pushing people towards small luxury purchases. Picture: Jake Nowakowski.
Compare the Market economics director David Koch said tighter budgets would likely have a cooling effect on some of the country’s overheated property markets, which could potentially be good news for prospective buyers.
“People may not be able to borrow as much as they once could, but that doesn’t necessarily hurt their chances of buying a home — particularly if they were already in a good position to do so,” he said.
“Everyone is in the same boat, so even if your buying budget has shrunk, it’s likely the buyers you’re competing with are facing the same challenge.”
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