5232.0 - Australian National Accounts: Finance and Wealth, Mar 2018 Quality Declaration
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 28/06/2018
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HOUSEHOLD SECTOR SUMMARY
Household net worth was $10,222.8b at the end of March quarter 2018, comprising predominantly of land and dwelling assets, financial assets, and household liabilities. During the quarter, household net worth decreased by $41.1b driven by holding losses (real and neutral) of $79.4b.
Holding losses on financial assets were $42.9b in March quarter 2018, driven by valuation decreases in insurance technical reserves (composed mainly of equity investment). Holding losses on land and dwellings were $33.4b. Households recorded real holding losses on land and dwellings this quarter of $45.5b after reporting a real holding gain in the December 2017 quarter. The real holding loss this quarter is the largest since September quarter 2012. Real holding losses occur when the increase in the value of assets is less than the general price increase.
Household transactions in net assets were $30.1b. Net capital formation recorded $8.5b, driven by net acquisitions of dwellings. Net acquisition of financial assets were $47.3b, the major contributors of which were net equity in reserves of pension funds and deposits. Net incurrence of liabilities were $25.6b driven by transactions in liabilities of long term loans.
Graph 1. Components of Household balance sheet
Household liabilities outgrew assets during March quarter 2018, resulting in a decrease of 0.4% in household net worth, falling from a 2.0% rise last quarter. Household liabilities was the largest contributor to the decrease in household net worth, detracting 0.3 percentage points, followed by land and dwellings assets detracting 0.2 percentage points. Net worth per capita declined to $410,708 in the March quarter from the December quarter estimate of $414,277.
HOUSEHOLD SECTOR FINANCIAL RATIOS
Graph 2. Interest payable to income ratio
The interest payable to income ratio at March quarter 2018 increased to 10.7%, from the December quarter 2017 ratio of 10.2%. This indicates that the proportion of household gross disposable income required to meet interest payments increased slightly in the March quarter.
Graph 3. Gearing ratios
The mortgage debt to residential land and dwellings ratio rose to 26.6% from the December quarter 2017 result of 26.4%, 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 18.9% of assets in March quarter 2018, increasing from 18.6% in December quarter 2017. This ratio has remained stable over recent quarters, reporting results between 18.6% and 19.0% since September quarter 2016. The consistency in the ratio highlights the degree to which households have been reliant on debt in recent years.
The ratio of household debt to liquid assets increased from 114.7% in December quarter 2017 to 115.6% in March quarter 2018, indicating holdings of debt outgrew liquid assets during the quarter. The growth in debt was driven by increases in loans. Household debt has exceeded 100% of liquid assets since September quarter 2002, peaking at 129.8% in June quarter 2011.
ANALYTICAL MEASURES OF INCOME, CONSUMPTION AND WEALTH
Graph 4. Household net saving
Household net saving was $5.7b in March quarter 2018, increasing from $2.3b in December quarter 2017. When other changes in real net wealth, commonly known as the wealth effect, is added to net saving, the value decreases from $147.4b in December quarter 2017 to -$82.9b in March quarter 2018. This was largely driven by real holding losses in financial assets and in land and dwelling assets.
Graph 5. Gross disposable income
Household gross disposable income fell from $302.2b to $289.8b in March quarter 2018. However, household gross disposable income adjusted for changes in real net wealth fell from $447.3b to $201.2b, driven by real holding losses in land and dwelling assets and financial assets. This contrasts with December quarter 2017, which saw a positive wealth effect on household incomes.
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