No Stress, No Debt Aussies

The Bureau of Statistics has released the General Social Survey: States and Territories, 2010. It is the third survey of its type, after 2002 and 2006 surveys, and it provides insights into consumer wealth, finances and attitudes.

The survey covered 15,028 private dwellings. The results are useful in assessing the outlook for consumer-dependent areas of the economy.

Craig James, chief economist with CommSec recently reviewed results of the 2010. Contrary to popular belief, he concluded we were a nation with no debt and no stress.

Here’s what he had to say….Range of issues:

While the social survey covered a raft of topics like Internet use, attendance at sporting events, acceptance of other cultures, we will focus on the results that relate to the economy and financial markets.

No debt Aussies:

Around 61 per cent of Aussies claim to have no consumer debt, up from 58.8 per cent in 2006.

Taswegians are the most “debt free”; Northern Territorians are the least “debt free”.

Healthy Aussies:

Around 83 per cent of Aussies rank their health as “excellent” or “good”. People in the ACT feel the healthiest, from Western Australia and Tasmania.

Financial stress:

Only one in eight people couldn’t access $2,000 in an emergency (better than the 2006 survey).

ACT people are in the best shape; Queenslanders are less liquid.

Lower unemployment than thought:

Only three per cent of Aussies categorize themselves as unemployed with the ACT having the lowest result at 1.7 per cent.

Mobile Australia:

Around 43 per cent moved properties in the last five years, similar to the 2006 survey result. People in the Northern Territory are most mobile; South Australians, the least mobile.

What do the figures show and what does it all mean?

The latest social survey results cast dispersions on a lot of commonly-held beliefs.

We may generally perceive that people are struggling through life, racking up the debts and not in great health, but collated survey results reveal a far different picture.

Over half of us say we are in excellent health; almost two-thirds of Aussies have no consumer debt, and only one in three have experienced a major stress event over the past year.

Australian households appear to be good financial shape, suggesting that recent soft retail sales are more a reflection of consumer unwillingness to spend rather than consumer inability to spend because of financial reasons.

Unemployment is low, few households have much in the way of consumer debt and only a minority of households admit to any financial stress.

So rather than concluding that consumers are gloomy at present, in actual fact they are probably more ambivalent and uncertain, preferring to leave their money in the bank rather than the share market and opting not to splurge on retail goods.

On average 71 per cent of Aussies own their home or are paying off a mortgage but the rate ranges from 58.7 per cent in the Northern Territory to 77.8 per cent in Tasmania. Home-ownership has fallen from 2006 levels in the ACT, Victoria and Queensland.

And in all states and territories, a smaller proportion of households own their homes outright than in 2006. In 2010, around a third of Aussie households had equity in their home greater than $400,000. In contrast, only 10 per cent of these households have a remaining mortgage of more than $300,000.

The mining boom certainly seems to have benefitted Western Australian homeowners. Of all the families that own their own home in Western Australia, an amazing 29 per cent have more than $800,000 equity in their homes. In Victoria the proportion stands near 24 per cent while 23 per cent of NSW home owners have $800,000 or more equity in their homes.

So do you believe that two of every three Australians have no consumer debt like credit cards, personal loans or overdrafts?

Well, that’s what the latest social survey finds.

Taswegians are the most debt free with over 67 per cent claiming no consumer debt while only 51 per cent of those in the Northern Territory are in the same position.

These generally positive financial results may be part of the reason that Aussies aren’t overly stressed at present.

In fact 37 per cent say that they haven’t experienced any form of major stress over the past year such as losing a job, coping with a serious illness or experiencing the death of a family member or friend.

And that may be part of the reason why so many feel healthy with 54 per cent saying that they are in “excellent” health while another 29 per cent say they are in “good” health at present.

How often do people move house?

Of course the answer will vary a lot depending on how old you are and whether you are renting or own your home.

But the latest social survey from the ABS indicates that 43 per cent of Aussies on average moved house over the past five years, a similar result to the 2006 survey. (The social survey was conducted from August to November 2010, so mobility covers the five years up to 2010.)

Interestingly around half of those who own their home or are paying off a mortgage have moved in the past five years. Of course the reasons vary – it may be to upsize or downsize their homes, to purchase a home for the first time or for personal or employment reasons.

But if one in two homeowners is moving every five years, it represents opportunities for housing-dependent businesses such as real estate agents, conveyancing firms and removalists.

And just as there were stark differences in mobility across housing groups such as renters and buyers, the reasons for moving also varied markedly with “wanting a bigger or better home”, “purchasing a dwelling” and “family reasons” dominating. Interestingly though the proportion of people moving for “employment reasons” was low in most states except the ACT (20 per cent) and the Northern Territory (26 per cent).

And there was yet more fuel for the debate on what is the true level of unemployment.

The ABS says the unemployment rate is a bit over 5 per cent. Other analysts believe that it is closer to 10 per cent.

But on the responses provided to the social survey, on average only 3 per cent of people regard themselves as unemployed – similar to 2002 and 2006 surveys.

Certainly this is more in line with the data on unemployment beneficiaries. But the results suggest that the job market may be tighter than is generally believed.

What is the importance of the economic data?

What are the implications for interest rates and investors?

Businesses and governments need to closely assess the opportunities revealed from the latest social survey.

Aussies are in a position to spend, but don’t feel any great urgency. Aussies are constantly on the move. And if most of us are in good or excellent health, it suggests reduced demand for health services.

The survey results are not overly different from the 2006 survey. A higher proportion of households are paying off mortgages than four years ago, meaning that people are more interest rate sensitive.

Source: Craig James, Economist, CommSec



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