5232.0 - Australian National Accounts: Finance and Wealth, Mar 2019 Quality Declaration
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 27/06/2019
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Household sector summary
Household accumulation of wealth
(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.
Household wealth increases
Household wealth (net worth) increased 0.2% in the March quarter 2019, a positive turn around from the decline of 2.1% recorded in the previous quarter. A rebound in the Australian stock market drove increases in real holding gains on financial assets ($147.8b), recovering the real holding losses ($146.2b) in the previous quarter. Positive revaluations on reserves of pension funds (superannuation) accounted for 68.0% of holding gains on household financial assets, reflecting the 70% of investment of total pension fund assets in shares which in turn was helped by the rebound in the Australian stock market. Residential land and dwellings experienced real holding losses for a fifth consecutive quarter and offset the gains on financial assets during the quarter. Through the year, household wealth decreased 0.7%, reflecting continued falls in residential property prices.
The percentage point contributions to the change in household wealth were:
Graph 1. Net worth and residential land and dwellings year-on-year growth
Household wealth per capita decreased for a third consecutive quarter to $404,556.4, falling $1,511.9. This follows a record $9,992.7 fall in household wealth per capita in the previous quarter, and reflects the continued holding losses on residential land and dwellings.
Real holding gains on financial assets drove a 0.3% increase in total household assets, following a 1.5% fall in the previous quarter. Household liabilities grew 0.7%, with through the year growth at 3.7%, which is its lowest rate since March quarter 2013. This weakness is driven by soft growth in long term loans, which account for 92.0% of household liabilities.
Household transactions in net worth were $28.9b. The largest component at $23.0b, was the net acquisition of financial assets ($36.0b), with superannuation reserves the main contributor, followed by shares and other equity. Net capital formation at $6.0b was driven by net acquisitions of land and dwellings ($7.9b). These were offset by net incurrence of liabilities ($13.0b), driven by transactions in long term loans.
Household debt to assets ratio increases
The household debt to assets ratio gives an indication of the extent to which the overall household balance sheet is geared. Household debt to assets ratio increased from 19.3% to 19.4%, as growth in household debt (0.7%) outweighed the increase in total assets (0.3%).
The mortgage debt to residential land and dwellings ratio increased from 28.1% to 29.0% and is the largest quarterly increase since September quarter 2011. The rise in ratio reflects the fall in the value of residential land and dwellings (2.6%) together with an increase in mortgage debt (0.6%). Despite the large increase in the ratio, it is predominantly driven by the continued fall in the value of residential land and dwellings, as growth in mortgage debt has reduced to its slowest pace since September quarter 2013.
The household debt to liquid assets ratio reflects the ability of households to quickly extinguish debts using liquid assets (currency and deposits, short and long term debt securities, and equity). The household debt to liquid asset ratio decreased from 113.9% to 112.5%. The decrease in the debt to liquid assets ratio indicates growth in household liquid assets (2.0%) outweighed growth in household debt (0.7%). Growth in liquid assets was driven by increases in equity and deposits of 3.2% and 1.0% respectively, while the slow growth in debt reflects weak growth in household loan borrowing.
Graph 2. Risk ratios
The wealth effect
Household net saving increased $6.8b to $9.5b, driven by a decrease in final consumption expenditure ($17.7b), partly offset by a decrease in gross disposable income ($10.6b) and an increase in consumption of fixed capital ($0.3b). The fall in gross disposable income was driven by falls in compensation of employees and gross mixed income.
Household gross disposable income adjusted for other changes in real net wealth (wealth effect) increased $263.5 from $18.9b to $282.5b, reflected by real holding gains on financial assets. Household net saving adjustment for other changes in real net wealth increased to -$10.4b, from -$291.3b in the previous quarter. The $280.9b increase in household net saving plus other changes in net wealth reflects the real holding gains on financial assets, however the household sector remains in a dis-saving position for third consecutive quarter due to the continued real holding losses on residential land and dwellings.
Graph 3. Net saving plus other changes in real net wealth, original
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