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 2017	Sep Qtr 2017	Sep Qtr 2017	Sep Qtr 2017	Sep Qtr 2017
		$b	$b	$b	$b	$b
Non-financial assets
	Land and dwellings	6 733.2	10.8	8.2	-0.5	6 751.7
	Other non-financial assets	642.6	0.9	-	2.7	646.2
Financial assets		4 895.8	55.8	-	-15.6	4 936.0
Liabilities		2 311.5	12.6	-	2.3	2 326.4
Net worth		9 960.1	55.0	8.2	-15.8	10 007.5
Memorandum item
	Consumer durables (b)	374.8	2.4	-	-0.8	376.4
- 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 2017, household net worth was $10,007.5b, comprised predominantly of $6,751.7b of land and dwelling assets, $4,936.0b of financial assets and $2,326.4b of household liabilities. During the quarter, household net worth increased by $47.4b.

Net transactions contributed $55.0b to household net worth, made up of financial assets, of which $27.4b was equity reserves of pension funds and $23.7b in deposits accepted by banks.

Holding gains detracted -$15.8b from household net worth, largely driven by financial assets.




Household assets outgrew liabilities during September quarter 2017, resulting in a 0.5% quarterly growth in household net worth. Of the 0.5% increase in net worth this quarter, net transactions contributed 0.4% points to the growth.

Financial assets were the largest contributor to growth in household net worth increasing by 0.8% ($40.2b). The driver of growth in financial assets was household’s holding of currency and deposits which grew 2.4% ($25.0b). The value of household residential land and dwellings was the next largest contributor to growth, which grew 0.2% ($14.7b) in September quarter 2017, this was weaker than the 1.8% growth seen in June quarter 2017.


HOUSEHOLD SECTOR FINANCIAL RATIOS




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 "un-adjusted interest payable". It includes financial intermediation services indirectly measured (FISIM) on dwelling loans, consumer debt and unincorporated enterprises plus the corresponding interest payable for each of these series. It therefore represents the total nominal amounts of interest paid by the household sector. The interest payable to income ratio is relatively volatile in the short term, however long term trends may be observed. The interest payable to income ratio at September quarter 2017 decreased to 9.9%, from the June quarter 2017 ratio of 11.0%. 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 shows the extent to which household residential real estate assets are geared. The ratio increased 0.2 percentage points in September quarter 2017 to 26.4%, indicating that the value of residential real estate owned by households grew slower than mortgage debt.

The debt to assets ratio gives an indication of the extent to which the overall household balance sheet is geared. That is, the degree to which assets are dependent on debt. The debt to asset ratio remained stable, reporting 18.9% at end of September quarter 2017.

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 117.4% at 30 June 2017 to 116.2% at 30 September 2017, indicating holdings of liquid assets outgrew liabilities during the quarter. The growth in liquid assets was driven by increases in deposits and equities during the quarter.


ANALYTICAL MEASURES OF INCOME, CONSUMPTION AND WEALTH




Household net saving was $24.2b at 30 September 2017, increasing from -$3.4b at 30 June 2017. With the inclusion of other changes in real net wealth, commonly known as the wealth effect, net saving decreased from $53.0b to -$9.4b in September quarter 2017. The real holding losses of financial assets (-$28.5b) and real holding losses on land and dwelling assets (-$18.0b) compared to June quarter 2017, were the main drivers of the decrease in September quarter 2017.




Gross disposable income ($308.3b) increased 11.3% or $31.4b during the quarter. When the impact of the decline in other changes in real net wealth (wealth effect) to household disposable income of -$33.6b is factored in, household income is $274.7b at end of September quarter 2017.