NAB’s Australian Wellbeing Index recovered to 63.5 in Q2 2025, up from its all-time low of 62.4 in Q1, reflecting improved sentiment across income groups and key wellbeing factors.
“Australians have shown remarkable resilience, but this has required effort,” said NAB’s Dean Pearson (pictured), Robert De Iure, and Brien McDonald. “Most households have made adjustments to their lives, with many also supporting others.”
Satisfaction scores rose for most life aspects, including housing, government, and the economy, while anxiety levels fell. However, wellbeing remained below average for 42 of the 48 demographic groups surveyed.
Supporting the rebound in sentiment, ABS data showed household spending volumes rose 0.7% in the June quarter – marking the third straight quarterly gain – as consumers increased discretionary purchases, particularly on recreation and dining.
While interest rate pressures remain, NAB found that financial stress has declined.
“Pressures remain, but the effort required has eased,” Pearson, De Iure, and McDonald said.
NAB’s Household Financial Stress Index dropped to 46.1 in June, after two consecutive rises. Financial stress eased across all major indicators – especially concerns about retirement, medical costs, and non-essentials. Mortgage and rent costs continued to weigh heavily on younger Australians.
Living costs rose between 0.4% and 1% across household types in the June quarter, according to the ABS, but employee households experienced the smallest increase – helped by a 1.4% fall in mortgage interest charges as banks responded to the February cash rate cut.
Household savings remained under pressure, with a net -25% saying savings fell in the quarter. But concern over savings lessened, especially in capital cities and among higher-income groups.
NAB found a significant level of intergenerational financial support.
“Over 1 in 5 Australians over 50 are helping children or grandchildren financially, potentially impacting their own financial security,” the NAB economists said.
Among 18- to 29-year-olds, 27% were receiving financial help from parents or grandparents – mostly for day-to-day expenses (67%), followed by school fees, home deposits, and childcare.
Around one in 10 young adults were also helping support older family members.
Notably, one in 4 Australians over 50 who provide financial support say it’s negatively affecting their ability to meet financial commitments or retire comfortably.
“Optimism is also up, with migrants leading the way,” the NAB economists said.
While only one in 5 Australian-born respondents reported optimism about the future, over half of recent migrants (less than five years in Australia) felt optimistic. That number declined to average levels after 10 years of residency.
Confidence about the future remains mixed, with a net -24% of Australians still expecting a decline in quality of life over the next year. However, fewer are worried about savings, income, or unemployment compared to Q1.
“Australians have not been listening to economists. They needed visible, tangible changes,” the NAB economists said. “The signal that rates have peaked, and we’re moving to a downward cycle is significant.”
More consumers now believe house prices will rise over the next 12 months (+62%, up from +49%). Half of those with a mortgage said the impact of recent rate cuts had been positive for their household.
Headline inflation has eased to 2.1%, with trimmed mean inflation at 2.7% – the lowest since 2021 – fueling market expectations of another RBA rate cut in August, followed by a possible move in November.
However, ABS figures show spending on services dipped 0.5% in June despite stronger goods spending (+1.3%), with Westpac analysts cautioning that some of the rebound may reflect seasonal sales rather than a lasting recovery.
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