Aussies Still Anxious about Their Financial Future amongst Growing Positive Trends
According to conventional wisdom, the New Year, 2015 started off on a positive note for households, as oil prices have continued to decline and the Reserve Bank of Australia has announced its long awaited rate cut, alleviating some of the inflationary pressures.
However, according to a number of surveys conducted to determine the general household sentiment, many are still anxious despite the flurry of good news. Based on National Australia Bank’s quarterly Australian Wellbeing Index, the cost of living seems to be the major concern for 50 percent of the households. The overall result indicates that the population is living within a perpetual state of anxiety. Healthcare was ranked next to the cost of living at 34%, followed by employment 28%, the economy at 26%, and lastly security 23%.
Unhealthy Financial Habits
What’s worse is the fact that financial habits exhibited by Aussies are even more alarming. Australians have the greatest levels of household debt, which is complemented by a similar scale of underinsurance. According to a survey, not even a quarter of the households would be able to raise $3,000, should there be an emergency. And the general retirement balance was found to be substantially lesser than acceptable levels, with only 20 percent of the people actively preparing for their retirement.
An Optimistic and Prosperous Future
Apart from this unsettling information, the same report also indicated signs of Australians becoming more financially responsible within the following years. More than 12 percent of the participants expressed their desire towards paying off their home mortgages and various other loans.
Financial habits vary depending on the population demographics. Single Aussies claimed to have been working towards saving more for the future, while larger family with children aimed towards paying off their debts sooner. In addition, the younger generations are keener towards investing in a wide range of investments, including real estate.
Despite the RBA’s statement that, the current economic conditions offer a better value for renting rather than buying, the younger generation still considers home ownership as important as ever. A survey of South Australians reveals that over 60 percent of Australians consider home ownership a huge part of a secure financial future.
In spite of many challenges such as a lowered household sentiment index and the rising cost of living, the market conditions offer great prospects for those intending to become homeowners. The housing market seems to be steadying, which, along with governmental concessions such as the First Home Owner’s Grants, which allows more Aussies to become homeowners in the near future.
Improving Homeowner’s Condition Following Rate Cuts
The steady growth witnessed by the housing market, along with lowered interest rates, has boosted the wealth of homeowners. According to the quarterly St. George-Melbourne Institute Household Financial Conditions Report, the overall household financial conditions index increased by 2.6 percent in the fourth quarter of the previous year, while complete ownership saw an increase of 15 percent, representing the most impressive improvement for Aussie homeowners in the last two decades.
The lowered rates itself have improved the financial situation and quality of life for most homeowners, whether mortgaged or not. As those with home mortgage debts can use the lowered rates to their advantage by locking their interest payments at a lowered rate, resulting in reducing in fixed expenses and increased savings.
The growing trend of increasing household savings seems to be strengthening, with over 45 percent of households increasing their savings. The saving trend represents an increase of 3.7 percent compared to the previous quarter. It also represents the highest proportion of savings in a year.
Although, the economy looks far from perfect, it does seem to be headed in a positive trajectory. Households are seen to be adopting better financial habits while discarding bad habits. Should the market continue to steadily propel itself upwards and consumer behavior improves, the economy should be gearing towards positivity and optimism in the near future.