5232.0 - Australian National Accounts: Finance and Wealth, Mar 2017 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 29/06/2017   
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HOUSEHOLD SECTOR SUMMARY

HOUSEHOLD ACCUMULATION OF WEALTH



Amount outstanding at end
Transactions during
Other changes in volume during (a)
Holding gains (+)/losses (-) during
Amount outstanding at end
Dec Qtr 2016
Mar Qtr 2017
Mar Qtr 2017
Mar Qtr 2017
Mar Qtr 2017
$b
$b
$b
$b
$b

Non-financial assets
Land and dwellings
6 415.3
7.4
8.0
145.0
6 575.7
Other non-financial assets
625.8
0.6
-
4.1
630.5
Financial assets
4 674.2
27.7
-
63.2
4 765.2
Liabilities
2 306.1
27.8
-
1.4
2 335.3
Net worth
9 409.2
7.9
8.0
211.0
9 636.1
Memorandum item
Consumer durables (b)
341.9
1.0
-
2.6
345.5

- nil or rounded to zero (including null cells)
(a) Not all other changes in volume are separately identifiable. Some have been shown as holding gains.
(b) Consumer durables are not included in net worth.

At the end of March quarter 2017, household net worth was $9,636.1b, comprised predominantly of $6,575.7b of land and dwelling assets, $4,765.2b of financial assets and $2,335.3b of household liabilities. During the quarter, household net worth increased by $226.9b, driven by real holding gains of $190.7b. Real holding gains on net worth were largely driven by land and dwellings.

Net transactions contributed $7.9b to household net worth, made up of financial assets, of which $19.4b was equity reserves of pension funds and $11.4b in deposit assets with banks, and offset by long term loan borrowings of $22.3b.

Graph 1. Components of Household balance sheet
Graph Image for Graph 1. Components of Household balance sheet


Household assets outgrew liabilities during March quarter 2017, resulting in a 2.4% quarterly growth in household net worth. In March quarter 2017, $211.0b of holding gains contributed 93.0% of total growth in net worth for the quarter, the largest contribution to positive growth since December 2009.

The value of household residential land and dwellings grew 2.5% in March quarter 2017, this was slower than the 3.5% growth seen in December quarter 2016. Households non-residential land and dwellings assets grew by 1.6% in March quarter 2017 to $305.0b.


HOUSEHOLD SECTOR FINANCIAL RATIOS

Graph 2. Interest payable to income ratio
Graph Image for Graph 2. Interest payable to income ratio


The interest payable to income ratio represents the proportion of household gross disposable income that is required to meet interest payments. Interest payable in the graph is the "un-adjusted interest payable". It includes financial intermediation services indirectly measured (FISIM) on dwelling loans plus dwelling interest payable from the household income account. It therefore represents the total nominal amounts of interest paid by the household sector. The interest payable to income ratio is relatively volatile in the short term, however long term trends may be observed. The interest payable to income ratio at March quarter 2017 increased to 11.0%, from the December 2016 quarter ratio of 10.2%. This indicates that the proportion of household gross disposable income required to meet interest payments increased slightly in the March quarter.


Graph 3. Gearing ratios
Graph Image for Graph 3. Gearing ratios


The mortgage debt to residential land and dwellings ratio shows the extent to which household residential real estate assets are geared. The ratio declined 0.3 percentage points in March quarter 2017 to 26.4%, indicating that the value of residential real estate owned by households grew faster than mortgage debt.

The debt to assets ratio gives an indication of the extent to which the overall household balance sheet is geared. That is, the degree to which assets are dependent on debt. The debt to asset ratio has continued to decline down 0.2 percentage points to 19.5% at end of March quarter 2017.

The debt to liquid assets ratio reflects the ability of the household sector to extinguish debts in a short period of time using their readily available, or liquid assets. The following are classified as liquid assets: currency and deposits, short and long term debt securities, and equities. The ratio of household debt to liquid assets decreased from 124.4% at 31 December 2016 to 123.5% at 31 March 2017, indicating holdings of liquid assets outgrew liabilities during the quarter. The growth in liquid assets was driven by increases in deposits and equities.


ANALYTICAL MEASURES OF INCOME, CONSUMPTION AND WEALTH

Graph 4. Household net saving
Graph Image for Graph 4. Household net saving


Household net saving was $7.7b at 31 March 2017, decreasing from $12.7b at 31 December 2016. This is the lowest household net saving since June quarter 2008. With the inclusion of other changes in real net wealth, commonly known as the wealth effect, net saving decreased from $231.8b to $206.7b in March quarter 2017, caused by a slowdown in growth of real holding gains on land and dwelling assets ($131.3b) and financial assets ($53.0b) compared to December quarter 2016.

Graph 5. Gross disposable income
Graph Image for Graph 5. Gross disposable income


Gross disposable income ($278.6b) decreased 6.1% or $18.1b during the quarter. The addition of other changes in real net wealth (wealth effect) to household disposable income of $199.0b, increased household income to $477.6b at end of March quarter 2017.