5232.0 - Australian National Accounts: Finance and Wealth, Mar 2016 Quality Declaration 
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 30/06/2016   
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Amount outstanding at end
Transactions during
Other changes in volume during (a)
Holding gains (+)/losses (-) during
Amount outstanding at end
Dec Qtr 2015
Mar Qtr 2016
Mar Qtr 2016
Mar Qtr 2016
Mar Qtr 2016

Non-financial assets
Land and dwellings
5 888.3
5 904.7
Other non-financial assets
Financial assets
4 313.1
4 305.2
2 206.5
2 234.9
Net worth
8 653.8
8 640.6
Memorandum item
Consumer durables (b)

- 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 2016, household net worth was $8,640.6b, comprised predominantly of $5,904.7b of land and dwelling assets and $4,305.2b of financial assets, less $2,234.9b of household liabilities. During the quarter, household net worth decreased by $13.2b, its first decrease since September quarter 2011, driven by holding gains (real and neutral) of -$44.1b.

Transactions in net worth were driven by net capital formation of $11.9b, of which net acquisitions of land and dwellings were $10.9b and other non-financial assets were $1.0b. Net financial transactions were $11.3b, of which net acquisition of financial assets were $38.5b and net incurrence of liabilities were $27.2b. The major contributors to financial assets transactions were net equity in reserves of pension funds ($17.7b) and deposits ($12.8b). Households incurred liabilities predominately through long term loan borrowings ($26.3b).

Holding losses on financial assets were $46.5b in March quarter 2016, driven by valuation decreases in the listed equities market ($17.8b) and insurance technical reserves (driven by superannuation assets) of $37.3b. Households recorded holding losses of $2.2b on land and dwellings during March quarter 2016, their second consecutive quarterly loss, following holding losses of $8.0b in December quarter 2015.

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

Both household assets and liabilities grew during March quarter 2016, with growth in liabilities outpacing assets for the first time since September quarter 2011. Financial assets decreased by 0.2% ($7.9b), driven by falls in shares and other equities (1.2%) and insurance technical reserves - superannuation (0.6%) which was mainly due to holding losses on these financial assets. This resulted in a 0.2% decline in household net worth, recording its first decrease since September quarter 2011.

Household land and dwelling assets are primarily residential. Household residential land and dwellings grew by 0.3% ($15.1b) to $5,629.4b in March quarter 2016, continuing its upward trend for the fourteenth consecutive quarter. Growth in residential land and dwellings have continued to slow since peaking in June quarter 2015. Non-residential land assets include commercial and rural land owned by households and unincorporated businesses.


The financial ratios graphs presented here are derived from the household balance sheet, financial account and income account (Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0)).

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 "adjusted interest payable". It includes the financial intermediation services indirectly measured (FISIM) on the dwelling loan plus the dwelling interest payable from the household income account. It therefore represents the total nominal amounts paid as interest by the household sector. The interest payable to income ratio is relatively volatile in the short term, however some long term patterns may be observed. After a period of volatility during the Global Financial Crisis, the ratio stabilised from March 2010 onwards, displaying gradual downward trend. The ratio at March quarter 2016 was 10.4%, an increase from the December quarter ratio of 9.7%.

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

The mortgage debt to residential land and dwellings ratio shows the extent that household residential real estate assets are geared. The ratio rose to 28.6% in March quarter 2016 from 28.2% in December quarter 2015, indicating that mortgage debt grew faster than the value of residential real estate owned by households.

The debt to assets ratio gives an indication of the extent that the overall household balance sheet is geared. That is, the degree to which assets are dependent on debt. At 31 March 2016, household debt equalled 20.5% of assets, increasing from 20.3% in December quarter 2015. This ratio has remained stable over recent quarters, with results falling between 20% and 21% since December quarter 2013.

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 increased from 125.1% at 31 December 2015 to 126.4% at 31 March 2016, largely driven by valuation decreases in equity assets.


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

Household net saving was $17.3b in March quarter 2016, decreasing from $18.9b in December quarter 2015. With the inclusion of other changes in real net wealth, commonly known as the wealth effect, net saving decreased from $75.2b to -$2.2b in March quarter 2016, the last negative saving inclusive of the wealth effect was recorded in June quarter 2013 (-$56.6b). Real holding losses in financial assets ($38.1b) was the main contributor to the March quarter 2016 result, largely driven by valuation decreases in insurance technical reserves and equities.

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

The addition of -$19.5b in other changes in real net wealth (wealth effects) to household disposable income, decreased household income from $274.6b to $255.1b in March quarter 2016. This follows ten quarters of positive wealth effects, with the last negative wealth effect being recorded in June quarter 2013 (-$73.3b).