Households across the country are feeling worse about their net wealth, jobs, income and living expenses than at the start of the year, according to a recent survey.
For its latest ‘Household Financial Comfort Report’, ME Bank surveyed over 1,500 Aussie households in June 2019, finding that several key drivers of financial comfort fell over the preceding six months.
Australia’s falling property prices are thought to be the biggest contributor to the decrease in household financial comfort.
Other factors include a weakening job market and as a result, subdued wage growth, falling comfort with income and high levels of underemployment and job security.
The ‘net wealth’ sub-index saw the largest drop, falling 3% to 5.54 out of ten during the six months to June 2019.
Households not reliant on the aged pension in their retirement, with balances greater than $1 million and young and middle-aged singles and couples with no children were labelled ‘winners’ by the survey, reporting an increase in financial comfort.
Consulting Economist for ME Bank, Jeff Oughton, said financial comfort across most of the eleven drivers that make up the Index fell.
“The financial comfort of Australian households eased over the past six months, with a significant fall seen in comfort with wealth,” Mr Oughton said.
“Despite lower mortgage loan rates, expected cuts in personal income tax and higher local and global equity prices, this is largely a consequence of continued decreases in the value of residential property in many parts of Australia.”
Despite the falls, the overall financial comfort index still remains slightly above the report’s seven-year average.
And with the survey conducted before the government’s tax offsets had been distributed – and before the RBA’s June and July rate cuts had fully taken effect – financial comfort levels may well have risen since.
Underemployment a major concern
The report found financial comfort saw significant decreases among working Australians, while 26% of all workers said they felt insecure in their current job.
In June 2019, 35% of part-time and casual workers said they would prefer to work more hours – seeking an additional 23 hours per week.
“It’s clear from the latest Report that there are increased concerns around job availability and underemployment,” Mr Oughton said.
“The number of workers who felt it would be difficult to find a new job increased by 16% to over one in two employees, which is the highest recorded since late 2016.”
Livings costs our biggest worry
Around 44% of the 1,500 surveyed households cited the cost of necessities as their biggest financial worry.
This was followed by worries about the level of cash savings on hand (34%), ability to maintain lifestyle in retirement (31%) and the impact of legislative change (19%).
Furthermore, 20% of households didn’t think they could raise $3,000 in an emergency, while about 40% of households spent their entire monthly income.
“Since the latest Federal Budget was announced, households, on average, have slightly increased their precautionary savings,” Mr Oughton said.
“However, this saving behaviour was predominantly among those with a smaller amount of cash savings, and in contrast, those 10% of households reportedly spending more than their monthly income are overspending by more each month (up 18% in dollar terms).”
Other notable points from the survey were Western Australia reportedly being the most difficult job market in the country, while rental payment stress was reported by 62% of renters, up eleven points during the six months to June 2019.