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
		Jun Qtr 2018		Sep Qtr 2018		Sep Qtr 2018		Sep Qtr 2018		Sep Qtr 2018
		$b		$b		$b		$b		$b
Non-financial assets
	Land and dwellings	6 918.3		12.8		9.2		-79.7		6 860.5
	Other non-financial assets	652.9		-		-		2.4		655.3
Financial assets		5 213.8		47.7		-		42.4		5 303.9
Liabilities		2 401.9		8.1		-		3.5		2 413.5
Net worth		10 383.1		52.4		9.2		-38.5		10 406.2
Memorandum item
	Consumer durables (b)	361.0		3.2		-		-7.5		356.7

- 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.

Household net worth was $10,406.2b at the end of September quarter 2018, mainly compromising of land and dwelling assets, financial assets, and household liabilities. During the quarter, household net worth increased 0.2% (up $23.1b) and was driven by financial assets increasing 1.7% (up $90.1b). The growth in financial assets was due to financial transactions by households of $47.7b, followed by a holding gain on financial assets of $42.4b in September quarter 2018.

Household transactions in net worth were $52.4b. Financial transactions recorded $39.6b, driven by net acquisition of financial assets at $47.7b, the major contributors of which were net equities in reserves of pension funds and deposits; this was partially offset by the net incurrence of liabilities at $8.1b, driven by transactions in liabilities of long term loans. Net capital formation recorded $12.7b, driven by net acquisitions of land and dwellings at $12.8b.

Household holding losses (real and neutral) in net worth were $38.5b in September quarter 2018, driven by valuation decreases in land and dwellings. Households reported a real holding loss in land and dwellings of $129.7b, the third consecutive loss after the previous March and June quarters, reporting losses of $9.5b and $110.4b respectively. Real holding losses occur when the increase in the value of assets is less than the general price increase. The holding loss incurred by land and dwellings was slightly offset by the holding gain in financial assets of $42.4b in September quarter 2018.



Household net worth increased by 0.2% during September quarter 2018, slowing from the 0.6% growth last quarter. Financial assets were the largest contributor to the increase in household net worth, contributing 0.87 percentage points to growth. Other non-financial assets was the next largest contributor to growth in household net worth, contributing 0.02 percentage points. In contrast, land and dwellings, and liabilities detracted 0.56 and 0.11 percentage points from growth, respectively. Net worth per person decreased to $415,024 in the September quarter from the June quarter of $415,616.


HOUSEHOLD SECTOR FINANCIAL RATIOS



The interest payable to income ratio at September quarter 2018 decreased to 9.5%, from the June quarter 2018 ratio of 10.6%. This indicates that the proportion of household gross disposable income required to meet interest payments decreased slightly in the September quarter.


The mortgage debt to residential land and dwellings ratio rose to 27.5% from the June quarter 2018 result of 26.9%, 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 to which the overall household balance sheet is geared. Household debt equalled 18.8% of assets in September quarter 2018, unchanged from the 18.8% seen in June quarter 2018. The ratio has remained stable over recent quarters, reporting results between 18.5% and 18.9% since September quarter 2016. The consistency in the ratio highlights the degree to which households have been reliant on debt in recent years.

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 liquid assets. Liquid assets include: currency and deposits, short and long term debt securities, and equities. The ratio of household debt to liquid assets decreased from 115.1% in the June quarter 2018 to 113.2% in the September quarter 2018, indicating holdings of liquid assets outgrew liabilities during the quarter. The growth in liquid assets was driven by increases in currency and deposits during the quarter. Household debts have exceeded 100% of liquid assets since September 2002, peaking at 129.7% in June 2011. Although the ratio continues to fall from this high, it remains at an elevated level, indicating households may not be able to hurriedly extinguish debt if required.


ANALYTICAL MEASURES OF INCOME, CONSUMPTION AND WEALTH



Household net saving was $23.8b in September quarter 2018, increasing from -$5.2b in June quarter 2018. When other changes in real net wealth, commonly known as the wealth effect, is added to net saving, the value decreases from -$13.7b in June quarter 2018 to -$80.3b in September quarter 2018. This was largely driven by real holding losses in land and dwellings.



Household gross disposable income rose 11.6% from $287.6b to $321.0b in September quarter 2018. However, household gross disposable income adjusted for changes in real net wealth fell from $279.1b to $216.9b, driven by real holding losses in land and dwellings. This contrasts with June quarter 2018, which saw a positive wealth effect on household incomes.