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 2015	Sep Qtr 2015	Sep Qtr 2015	Sep Qtr 2015	Sep Qtr 2015
		$b	$b	$b	$b	$b
Non-financial assets
	Land and dwellings	5 700.3	12.8	7.7	111.9	5 832.7
	Other non-financial assets	645.1	2.6	-	2.5	650.1
Financial assets		4 219.4	51.5	-	-89.5	4 181.3
Liabilities		2 147.1	22.5	-	5.2	2 174.9
Net worth		8 417.7	44.3	7.7	19.6	8 489.2
Memorandum item
	Consumer durables (b)	321.0	2.7	-	0.7	324.5
- 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 September quarter 2015, household net worth was $8,489.2b, comprised predominantly of $5,832.7b of land and dwelling assets and $4,181.3b of financial assets, less $2,174.9b of household liabilities. During the quarter, household net worth increased by $71.5b, driven by transactions of $44.3b and holding gains (real and neutral) of $19.6b.

The $44.3b of transactions in net worth was driven by net financial transactions of $29.0b, of which net acquisition of financial assets were $51.5b and net incurrence of liabilities were $22.5b; and $12.8b in net capital formation of land and dwellings. Transactions in net worth outpaced quarterly holding gains, in dollar terms, for the first time since June quarter 2013. The major contributors to financial assets transactions were deposits ($33.8b) and net equity in reserves ($14.2b). The major contributor to transactions in liabilities was long term loan borrowings ($26.0b).

Large holding gains in land and dwellings ($111.9b) was offset by holdings losses in financial assets ($89.5b) resulting in holding gains in net worth of $19.6b. Superannuation assets recorded holding losses of -$87.9b during September quarter 2015 driving holding losses of total financial assets. Holding losses in superannuation assets was driven by valuation decreases in the listed equities market (-$121.7b).

Graph 1. Components of Household balance sheet


Both household assets and liabilities grew over September quarter 2015, resulting in 0.8% growth in household net worth. Net worth has continued to grow over the last sixteen quarters with September quarter 2015 recording weakest percentage growth since June quarter 2013 (0.2%).

Household residential land and dwellings grew by 2.4% ($130.8b), recording twelve consecutive quarters of growth in September quarter 2015. Growth in household residential land and dwellings was offset by a decrease in financial assets of 0.9% ($38.1b), recording a decline for the first time since June quarter 2013.


HOUSEHOLD SECTOR FINANCIAL RATIOS

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


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 trends may be observed. After a period of volatility during the Global Financial Crisis, the ratio stabilised from March 2010 onwards, settling into a gradual downward trend. The ratio at September quarter 2015 was 9.4%, a decrease from the June quarter ratio of 10.2%.

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 has declined to 28.1% in September quarter 2015 from 28.3% in June quarter 2015, indicating that the value of residential real estate owned by households grew faster than mortgage debt.

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 30 September 2015, household debt equalled 20.4% of assets, increasing from 20.3% in June quarter 2015.

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 decreased from 127.0% at 30 June 2015 to 126.5% at 30 September 2015, largely driven by an increase in deposits.


ANALYTICAL MEASURES OF INCOME, CONSUMPTION AND WEALTH

Graph 4. Household net saving


Household net saving was $35.5b for the quarter, increasing from $15.5b in the June quarter. With the inclusion of other changes in real net wealth, commonly known as the wealth effect, net saving decreased from $88.1b to $48.8b in September quarter 2015. Despite the decrease in net saving with the addition of the wealth effects, household net worth increased by $71.5b to $8,489.2b.

Other changes in real net wealth was $13.3b in September quarter 2015, down from $72.6b in June quarter 2015. Real holding gains for land and dwellings were $102.2b, down from $119.6b in June quarter 2015. These gains were offset by real holding losses of $96.7b in financial assets, recording its second consecutive quarterly loss. Real holding losses in financial assets were driven by net equities in reserves of pension funds and equities.

The addition of $13.3b in other changes in real net wealth (wealth effects) to household disposable income increased household income from $293.3b to $306.6b in September quarter 2015. At the height of the GFC in December quarter 2008 the wealth effect had large impacts on household income, decreasing it by $469.9b to -$251.7b. In recent quarters, wealth effects have made positive impacts on household wealth with the last negative wealth effect being recorded in June quarter 2013.

Graph 5. Gross disposable income