The financial situation of Australian households has deteriorated over the last quarter, yet more Aussies are willing to spend their savings.
The St. George and Melbourne Institute household financial conditions index decreased 7.9% to 122.2 in March, which is 1.8% below its value a year ago.
The proportion of households adding to their savings decreased four percentage points while the proportion of households that were drawing on their savings reached the highest level in nearly 20 years at 15.6%.
It shows a marked change from the previous quarter, which recorded the biggest annual improvement in financial conditions for Australian households since the survey first launched nearly 20 years ago.
The index increased 4.3% in December to 132.6, the highest level since 2009. That result was the fourth consecutive quarter increase and a rise of 9.3% over 2013.
But the research authors, after surveying 1200 respondents, put the deterioration in household financial conditions in this quarter down to more households drawing on their savings, and said Australians were easing their consumer caution which will help support economic growth.
“What we’re hearing from our customers is that they’ve been focused on saving money and reducing their levels of debt since the global financial crisis. They now feel they are in a better position to spend more, especially with low interest rates helping them to save money. However, Australians are still taking a cautious approach to their spending overall,” St. George retail banking general manager Andy Fell said.
Nearly four in five of Australian households remain in a stable financial position, although there was a decline of 5.9% on the previous quarter. During March, 44.6% of households put savings away.
The proportion of households holding mortgages rose to 40.2% in March, corresponding with stronger demand for housing.
But those trying to save for a mortgage may be thwarted still – renters experienced a decrease in their financial conditions, dropping a further 2.5% in March after a 9.1% decline in December, as rents continue to increase.
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