Despite overall decline in conditions, close to 70% of Aussie households have started the year in a stable financial position, according to the December 2012 St George-Melbourne Institute Household Financial Conditions Report.
The report’s household financial conditions index fell 4.8% from December, 2011 and 18-24 year olds experienced the largest decline (13.1%) followed by those 65 years and over (7.4%).
St.George general manager, retail banking, Andy Fell, says the report findings are consistent with what the bank is seeing and hearing from its customers.
“It is great that a large proportion of people are still managing to save, which makes the outlook for 2013 positive. It’s also encouraging to see the ‘Great Australian Dream’ of buying your own home is alive and well.”
In the report, 18.1% of respondents cited putting down a deposit or buying a home as a motivation to save; this was further supported by the 2% increase in mortgage uptake to year end.
Chief economist at St.George, Hans Kunnen, says the economy grew in 2012, enabling most people to save ‘at least a little’, although the motivations behind saving varied.
More than half the respondents erred on the side of caution, listing ‘saving for a rainy day’ (53.4%) and saving to pay down debt (43.5%), while close to 60% had holidays and travel at top of mind.”
“Likely contributors to these motivations include the global uncertainties hitting the headlines throughout 2012, generating greater awareness of the importance of putting money aside and the dangers of holding excessive debt. The high Australian dollar has also inspired people to travel more widely overseas. It was, however, those in the older age bracket who felt the impact of lower interest rates as they rely more on interest income, while low wages and higher unemployment among younger people made it more difficult for these groups to save.”
The 25-44 year age group has maintained its position as the group who felt most able to save and whose financial conditions remained most stable during 2012. Within this group are households with double incomes, as well as home owners who have benefited from lower interest rates on mortgages and managed to save the difference.