5232.0 - Australian National Accounts: Finance and Wealth, Sep 2019 Quality Declaration 
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 19/12/2019   
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Credit market summary

Non-financial domestic sectors

Credit market outstandings at end
Demand for credit during
Other changes during
Credit market outstandings at end
Jun Qtr 2019
Sep Qtr 2019
Sep Qtr 2019
Sep Qtr 2019

Non-financial corporations
Investment funds
Other private
3 617.1
3 656.5
General government
State and local
2 360.8
2 364.5
7 366.4
7 465.0

- nil or rounded to zero (including null cells)

Demand for credit

Demand for credit ($42.8b) continued to slow this quarter, following 2018-19 which had the weakest annual demand for credit since 2012-13. Demand for credit this quarter was driven by the public sector, with subdued demand by the private sector and households. Households' demand for credit (-$1.3b) was negative for the first time since March quarter 1993. Net bond issuances by National general government were $12.1b, while state and local general government borrowed $8.9b. While other private non-financial corporations borrowed $10.4b, equity raising by the sector was only $1.0b.

Demand for credit by household continues to be impacted by the slowing growth in loans for residential property, reflecting the weak housing market. Households transactions in loans were negative for the first time since December quarter 2014, with $12.2b of household loans being securitised. Growth in owner occupier loan balances continued to soften, while investor loans balances fell. Household short term loan balances also continued to drop.

Demand for credit by other private non-financial corporations was the second weakest demand in 7 years ( first being December 2018). This is in line with the lowest equity raising by the sector since December quarter 2012. National general government's demand for credit was the highest since June quarter 2017, corresponding with a strong increase in net bond issuances this quarter. State and local general government's demand for credit was the highest since June quarter 2012, driven by loans from central borrowing authorities, with the sector's credit demand over the past year the strongest since 2012.

Graph 1. Demand for credit
Graph 1 shows Demand for credit

Valuations increases in bonds and equities drive credit market outstanding

Despite subdued demand for credit over the past year, significant valuation increases have pushed through the year growth in credit market outstanding of non-financial domestic sectors to 5.7%. Strong price increases in the Australian stock market and falling bond yields, particularly over the last 3 quarters, were the main contributors to the growth.

Credit market outstanding rose 1.3% this quarter, following last quarter’s 2.3% increase. There were significant valuation increases in the equity of other private non-financial corporations and government bonds, reflecting the rise in the Australian stock market and falling bond yields during the quarter.

Graph 2. Credit market outstanding
Graph 2 shows Credit market outstanding