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The majority of Australians (82%) feel that they’re in a ‘steady’ financial situation, while 43.6% say they’re managing to put savings away, according to the June St.George-Melbourne Institute Household Financial Conditions Report.
In a surprising development, tenants saw the greatest improvement in their financial conditions, with a 12.9% increase since March. Despite lower mortgage rates, mortgagees experienced a decline of 10.8% in their financial conditions; however, fewer households held mortgage debt, with this category declining to 36.6% from 38.8% over the quarter. The majority of states also experienced increased outright home ownership, suggesting greater ability to pay off mortgages entirely.
Putting money aside for holidays came in as the number-one priority amongst those surveyed, a position which has been held in each index over the past year. Moving up the list this quarter was the motivation to save to purchase a new car and this was supported by a visible increase in households holding car finance debt, (from 13.6% to 16.2% since March) with consumers looking to take advantage of favourable loan rates and showing a confidence to spend their savings.
The index has lifted modestly since March, with a 1.1% improvement in conditions, mirroring the below-trend growth of the national economy. This status was echoed across key areas of the survey, although some felt the pinch of industry slowdowns.
St.George chief economist, Hans Kunnen, says employment conditions have been improving in the part-time and casual sectors, which favour the 18-24 year old age group.
“As a result, their conditions have jumped 13.9% since March. An improvement of 5.0% in conditions for women has also been achieved, likely due to mothers of young children making up a portion of the part-time workforce.”
“Those who didn’t end the quarter on a positive note were the 25-44 year olds with a 5.1% decrease in their conditions; potentially this matches the decline seen in the paraprofessional and trade sectors of 10.2% since March. These results may be partly attributed to the slowdown in mining,” says Kunnen.
“It is also positive to see the trend continuing in motivations to save, with holidays remaining number one on the list again this quarter. We also saw the motivation to purchase cars on the increase, showing that households are being assertive about setting their goals and working towards achieving them during what is currently a favourable economic climate.”
As a means to save, banks remain the most popular channel for 86.2% of respondents. Superannuation remained as the second most popular form of investment asset, moving from 77.9% to 80.0% since March.
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