5232.0 - Australian National Accounts: Finance and Wealth, Mar 2020 Quality Declaration
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 25/06/2020
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Household sector summary
(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 net worth
Household net worth (wealth) decreased $204.0b (-1.8%) in the March quarter due to a $333.6b decrease in financial assets, driven by superannuation reserves (-$268.2b) and shares and other equity (-$57.6b), reflecting the impact of COVID-19 on the Australian and international financial markets from late February 2020. These falls were partly offset by an increase in deposits ($17.2b), reflecting households’ preference for safe and liquid assets in times of economic uncertainty and the low levels of consumption on non-essential goods and services due to COVID-19 restriction measures. The fall in financial assets was partly offset by a $145.8b increase in land and dwellings. There were no significant impacts from COVID-19 containment measures, such as government restrictions on auctions and open house inspections on growth in land and dwellings, as these measures came into effect during the last week of the quarter.
Household wealth per capita decreased $9,982 to $428,585, the largest fall since September quarter 2011. Quarterly growth in household wealth was negative for the first time since December quarter 2018, however through the year growth was 6.6%, driven by the strong rebound in residential property prices over the past year.
Graph 1: Household net worth
Graph 2. Quarterly movement in household financial assets
Household liabilities grew $18.7b (0.8%), following moderate growth in the previous quarter. Total household liabilities were $2,510b, 92% of which are long term loans. The 0.9% growth in long term loans this quarter was due to rises in owner occupier (0.9%) and unincorporated business loans (1.0%), partly offset by falls in investor housing loans (-0.3%). Short term loan borrowings by households decreased 7.2% this quarter, the largest fall in the history of the time series, reflecting weak expenditure on non-essential goods and services due to COVID-19 restriction measures and bushfire impacts as well as a continuation of a long term decline driven by tighter serviceability requirements on mortgages and interest rates not changing despite cash rate cuts.
The wealth effect
Household gross disposable income adjusted for other changes in real net wealth (wealth effect) decreased from $445.5b to $89.3b, and household net saving adjusted for other changes in real net wealth was negative this quarter, decreasing from $125.3b to -$209.2b. The falls in gross disposable income and household net saving when adjusted for other changes in net wealth are due to the significant real holding losses of $360.4b in financial assets this quarter, this is the strongest negative result in the time series.
This quarter the household saving ratio increased from 1.2 to 6.7 (original basis), driven by a large fall of 7.6% in final consumption expenditure. Gross disposable income fell by 2.0% this quarter, partly offset by a 0.8% increase in consumption of fixed capital. The decline in household consumption expenditure was due to both the bushfires and COVID-19.
Household debt to assets ratios
The household debt to assets ratio increased from 19.1 to 19.6, as the fall in household assets (-1.4%) outweighed the rise in household debt (0.8%). The ratio of mortgage debt to residential land and dwellings decreased from 28.0 to 27.6, as the value of land and dwellings (2.0%) owned by households (which had no significant impacts from COVID-19) outgrew mortgage debt (0.6%) for the third consecutive quarter.
The household debt to liquid assets ratio grew strongly this quarter, from 109.6 to 112.5. The rise was driven by large falls in ownership of shares and other equity, which were impacted by COVID-19 effects on financial markets.
Graph 3. Mortgage debt to residential land and dwellings ratio breakdown
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