ME 16th Household Financial Comfort Report June 2019 v2

Household financial Sixteenth
survey
comfort report. published
August 2019.
Insights from
national research
into the financial
psychology
of Australian
households.
Property price falls and a weakening labour market

have Australians unsure of their next move.
About
this report.
The ME Household Financial Comfort Report

provides in-depth and critical insights into
the financial situation of Australians based
on a survey of 1,500 households.
The survey is designed, developed and
produced biannually by industry super
fund-owned bank ME with assistance from
DBM Consultants and Economics & Beyond.
This edition presents the findings from About.
the 16th survey, published in August 2019.
Survey history
• 1st edition: October 2011
• 2nd edition: August 2012
• 3rd edition: February 2012
• 4th edition: August 2013
• 5th edition: February 2013
ME is 100% owned by Australia’s
leading industry super funds.
• 10th edition: August 2016 Contact ME.
Matthew Read,
General Manager, Communications
T 0432 130 338
• 15th edition: February 2019 E matthew.read@mebank.com.au
• 16th edition: August 2019 Level 28, 360 Elizabeth Street
Melbourne, VIC 3000 Australia
This report includes but is not limited to,
the Household Financial Comfort Index, an mebank.com.au
overall measure of households’ perceptions
of their financial comfort, generated by asking
respondents to estimate their financial comfort,
expectations and confidence across 11 measures.
Over time, the report tracks changes in comfort
and in doing so, highlights the ongoing – and
potentially shifting – differences between
household types, in terms of financial comfort
and behaviours in managing finances.
Content.
Table of figures. 1
01. Executive summary. 2
02. Macroeconomic and financial context. 4
03. Overall fall in financial comfort 7

3.1 Household Financial Comfort Index goes down a bit. 7
3.2 How did financial comfort change across groups with low, 8
medium and high financial comfort?
3.3 How did the key drivers of financial comfort change? 9
3.4 Comfort with net wealth mainly drives the fall. 10
3.5 A bigger fall in comfort prevented by slight increases 12
in investments and savings.
3.6 Weakening job market also driving lower financial comfort. 14
3.7 Comfort with income eases. 17
3.8 Comfort with monthly expenses falls while living costs 21
remain a key concern.
3.9 Despite falling loan rates, comfort with debt eased. 24
3.10 M
ore people saving more and fewer people 26
over-spending and by less.
04. Overall financial comfort by different cohorts. 31

4.1 Life stage: financial comfort remains mixed. 31
4.2 Generations: financial comfort remains mixed. 32
4.3 States: financial comfort remains mixed. 34
4.4 Workforce segments: financial comfort deteriorates a lot. 36
4.5 Household incomes: financial comfort varies a lot.37
4.6 Housing tenure: financial comfort deteriorates a lot. 38
4.7 Mortgage status: financial comfort deteriorates a lot. 39
05. Other findings. 41

5.1 Rent payment stress rebounds slightly in past six months. 41
5.2 Confidence in the ability to raise $3,000 for an emergency. 43
5.3 House price expectations remain positive. 44
5.4 Retirement. 45
06. Appendix a – household statistics. 48
07. Appendix b – methodology. 49

“Our financial
situation has
worsened
because property
prices have
dropped, jobs
are very insecure,
and wages
have remained
the same while
living costs have
increased.”
MIDDLE–AGED COUPLE, NO CHILDREN,
NSW
IV 01. Executive summary.
Table of
figures.
Figure 1 – Changes in the Household Financial Comfort Index. Scores out of 10 7
Figure 2a, b and c – Household Financial Comfort Index, by levels of comfort. Scores out of 10 8
Figure 3 – The 11 components that make up the index, with levels of comfort over time. Scores out of 10 9
Figure 4 – Comfort with households’ level of wealth. Scores out of 10 10
Figure 5 – Comfort with households’ level of wealth. Scores out of 10 11
Figure 6 – Comfort with level of investments. Scores out of 10 12
Figure 7 – Overall household financial comfort by superannuation 13
Figure 8 – Comfort with households’ current level of cash savings. Scores out of 10 13
Figure 9 – Ease of finding a new job in next two months if became unemployed 14
Figure 10a, b and c – Ease of finding a new job in next two months by labour force, state, gender and age 15
Figure 11 – Feeling of security in job in past month 16
Figure 12 – Preference for work hours (part-time and casual employees) 16
Figure 13 – Comfort with current household income. Scores out of 10 17
Figure 14 – Household income changes during past year 18
Figure 15 – Income changes over past year across the labour force 19
Figure 16 – Income changes over the past year across various income bands 20
Figure 17 – Comfort with households’ ability to pay regular expenses. Scores out of 10 21
Figure 18 – Top reasons why households’ financial situations worsened in the past six months 22
Figure 19 – Biggest financial worries and positives 23
Figure 20 – Comfort with households’ current level of debt. Scores out of 10 24
Figure 21 – Ability to manage debt over the next 6–12 months 25
Figure 22 – The proportion of households that save, break even or overspend each month 26
Figure 23 – ‘Net savers’ (proportion saving monthly minus those spending their income or more monthly) 27
Figure 24 – Estimated amount savers saved and over-spenders overspent each month 27
Figure 25 – Cash savings currently held – proportion of households 28
Figure 26 – Comfort with ability to handle an emergency. Scores out of 10 29
Figure 27 – Overall financial comfort across different household types. Scores out of 10 31
Figure 28 – Overall financial comfort across generations. Scores out of 10 32
Figure 29 – Overall financial comfort across young singles/couples and students. Scores out of 10 33
Figure 30 – Overall financial comfort across different states and territories. Scores out of 10 34
Figure 31 – Comfort index across metropolitan and regional Australia. Scores out of 10 34
Figure 32 – Comfort index across larger states and metropolitan areas. Scores out of 10 35
Figure 33 – Comfort index across the workforce. Scores out of 10 36
Figure 34 – Overall financial comfort of households in different annual income bands 37
Figure 35 – Overall financial comfort based on housing tenure. Scores out of 10 38
Figure 36 – Overall financial comfort of households with and without mortgages. Scores out of 10 39
Figure 37 – Percentage of household disposable income paid towards rent 41
Figure 38 – Percentage of household disposable income paid towards a mortgage 42
Figure 39 – Ability to raise $3,000 in a week for an emergency 43
Figure 40 – What do you think is likely to happen to the value of your property in the next 12 months? 44
Figure 41 – Comfort with standard of living in retirement. Scores out of 10 45
Figure 42 – How will your household fund retirement? 46
Figure 43 – Expectations for adequacy of income in retirement 47
Table of figures. 1
01.
Executive
summary.
Household financial comfort dragged down by residential property price

falls and weakening labour market.
Australian households are feeling overall worse about workers recording a 3% decrease to 5.86, part-time
their net wealth, jobs, income and living expenses workers decreasing 4% to 5.1, casual workers
with further significant residential property price decreasing 1% to 5.02 and self-employed workers
falls over the past six months and a weakening labour down 3% to 5.57.
market, ME’s latest Household Financial Comfort
Oughton said: “It’s clear from the latest report that
Report has revealed.
there are increased concerns around job availability
Consulting Economist for ME, Jeff Oughton, said and underemployment. The number of workers who
that despite remaining a little above the report’s felt it would be difficult to find a new job increased
seven-year average, financial comfort across most by 16% to over one in two employees, which is the
of the 11 drivers that make up the Household Financial highest recorded since late 2016.”
Comfort Index fell, with net wealth in particular
In June 2019, 35% of part-time and casual workers
seeing the largest drop, falling 3% to 5.54 out of 10
said they would prefer to work more hours – seeking
during the six months to June 2019.
an additional 23 hours per week. Meanwhile, 26% of
“The financial comfort of Australian households eased all workers said they felt insecure in their current job.
over the past six months, with a significant fall seen in
Households’ comfort with their incomes also fell by
comfort with wealth. Despite lower mortgage loan rates,
1% to 5.69 in the latest survey. Only 36% of Australian
expected cuts in personal income tax and higher local
households reported an increase in their annual income
and global equity prices, this is largely a consequence
during 2018/19, falling two points from December 2018,
of continued decreases in the value of residential
and there were fewer income gains recorded across
property in many parts of Australia,” said Oughton.
households in general. Those reporting falls in income
“Comfort with wealth would have fallen much more remained about 25% of households.
if it wasn’t for record bond prices, rebounding share
markets as well as the government’s retention of Living costs and a lack of savings
negative gearing on investment properties and cash are household’s biggest financial ‘worries’
refunds for franking credits, which saw household
In net terms of the greatest financial worries and
comfort with investments increase.”
positives, cost of necessities was the most commonly
Financial comfort with investments (in financial assets, cited worry in ME’s latest report, nominated by 44% of
such as shares, super and property) was the only households. This was followed by worries about level
driver across the index to improve (up only 1%), of cash savings on hand (34%), ability to maintain
but was largly accrued by households with higher lifestyle in retirement (31%) and impact of legislative
incomes. Households with incomes $200k+ and change (19%).
large superannuation balances (above $1 million)
Looking more closely at savings, Oughton said that
saw increases to overall financial comfort, 10%
overall, comfort with cash savings remained steady
to 7.45 and 11% to 8.3 respectively during the six
at 5.09 during the six months to June 2019.
months to June 2019.
“Since the latest Federal Budget was announced,
A weakening labour market and subdued income households, on average, have slightly increased their
growth weigh on comfort precautionary savings. However, this saving behaviour
was predominantly among those with a smaller
Financial comfort among households also eased as
amount of cash savings, and in contrast, those 10%
a consequence of a weakening job market, which
of households reportedly spending more than their
resulted in subdued wage growth, falling comfort with
monthly income are overspending by more each
income and high levels of both underemployment and
month (up 18% in dollar terms).”
job insecurity.
Oughton also noted that about 40% of households
In particular, financial comfort among working
continued to spend all their monthly income.
Australians significantly deteriorated, with full-time
2 01. Executive summary.

When asked about retirement, the anticipated standard Investors were relatively more optimistic than owner
of living in retirement has eased, falling 1% to 5.2, occupiers, albeit less so than six months ago; 46%
notwithstanding a rise in the comfort of households of investors expected the value of their investment
expecting to self-fund their retirements (up 7% to 7.31). properties to rise during the next 12 months,
while only 9% anticipated a fall (including 2% who
Furthermore, of all 11 components that make up the
anticipated a large fall). Investors in Sydney were
Household Financial Comfort Index, Australians still felt
the most optimistic about property values (with 54%
the least comfortable with their ability to cope with
of investors expecting rises and only 6% expecting
a financial emergency, which fell slightly by 1% to only
a fall), followed by investors in Brisbane (50%) and
4.77 out of 10. Indeed, 20% of households said they
in Melbourne (44%).
didn’t think they could raise $3,000 in an emergency.
Oughton summarised the key winners and losers
Residential property price correction a drag, but
from ME’s 16th Household Financial Comfort Report:
most households increasingly optimistic for 2019/20
While the residential property price correction has Winners:
negatively impacted wealth, comfort by housing
• Households not reliant on the government aged
tenure has been mixed over the past six months.
pension in their retirement
The report reveals that comfort has lessened
among both home owners with a mortgage and • Households with super balances greater than
renters, which could be attributed to tightening $1 million – financial comfort up 11% to 8.3
in the availability of credit, continued housing
• Young and middle-aged singles/couples with
unaffordability, and high housing debt and rental
no children
payment stress. In contrast, comfort has risen
among those who own their home outright and • Geared investors in residential property markets –
geared property investors post-Federal Election, with financial comfort up 8% to 6.9
negative gearing retained on investment properties.
• NSW/ACT and VIC – the highest levels of financial
Oughton said: “It’s evident that despite the latest comfort were found in NSW/ACT (5.63), followed
monetary policy changes, there remains high levels by Victoria (5.55)
of housing debt worry and actual payment stress
among Australians. Losers:
“The number of households contributing more than • QLD, TAS and SA/NT – overall comfort fell in
30% of their disposable income towards paying off these states
a mortgage has remained steady at about 43%, while
the corresponding figure for renters has risen to 62% • Brisbane, Perth and Adelaide residents – comfort
– partly reversing the improvement reported in the in these cities dropped to match the low levels of
previous two surveys.” comfort reported in regional Australia
In contrast to the actual fall in dwelling prices during • Working Australians – comfort significantly
the past 12 months, the majority of households living deteriorated among workers, with full-time workers
in their homes and investment property investors recording a 3% decrease to 5.86, part-time
were feeling even more positive than six months ago workers decreasing 4% to 5.1, casual workers
about the 12–month outlook for dwelling prices. decreasing 1% to 5.02 and self-employed workers
down 3% to 5.57
In fact, over 41% of households living in their homes
expected their dwelling prices to rise during 2019/20, • WA workers – this state was reported as being
while only 11% expected the value of their home to fall the most difficult job market, with 61% expecting
(including only 3% who are expecting a large fall). it would be difficult to get a new job in WA
However, the expectations of increasing property • Renters – rental payment stress was reported
values amongst owner occupiers varied significantly by 62% of renters, up 11 points to June 2019.
across major capital cities, with a significant rise in
Brisbane (46%), Sydney (45%) and Melbourne (42%)
– in comparison to Perth (25%).
01. Executive summary. 3

02.
Macroeconomic
and financial context.
Australian household finances, on average, remained • Household consumption growth has been weak,
relatively resilient during the first half of 2019, though broadly unchanged on a per capita basis during
there were pockets of financial stress across some the past year mainly due to moderate labour
households and regions. Macroeconomic and financial income growth (subdued wages but solid job
vulnerabilities remain related to underemployment, gains) and negative wealth effects from falling
sluggish household incomes, high and rising debts, house prices on discretionary items (such as
some tightening in access to credit and significant new cars). As measured by the official data, the
sustained falls in housing prices. On the other household saving rate from current disposable
hand, record low mortgage rates and relatively income has risen from a recent low in the second
low unemployment have supported debt servicing. half of 2018. Consumer inflation has remained
After a significant fall in the second half of 2018, subdued, up 1.6% during 2018/19. After relatively
Australian’s household (net) wealth is estimated large rises during 2018, administered/partly
to have risen slightly during the six months to regulated prices (such as electricity, gas, health,
June, with solid financial asset gains (especially property rates) have slowed. Annual rent rises
in superannuation and direct equity holdings) have been the lowest since the early 90s with
partly offset by increased gearing and a further fall rents down significantly in Perth and generally
in dwelling values. Households were also supported subdued elsewhere. On the other hand, grocery
by both (subdued) wage gains and rising workforce food inflation has picked up due to the drought
participation. On the other hand, both consumer and fuel prices have increased significantly during
sentiment and household consumption growth have the June quarter.
remained a bit below average and the saving ratio has • Conditions in most housing markets remained soft.
risen further. Debt growth has slowed recently, but However, there were signs that prices have
still increased slightly faster than income and assets. stabilised in Sydney and Melbourne over recent
Debt servicing costs have continued to rise due to
months, as clearance rates have increased, albeit
increased gearing – notwithstanding low mortgage
on low sales volumes. On the other hand, house
rates. There was still significant underemployment.
prices have continued to significantly fall in Perth
Recent trends in the latest official estimates and Darwin. According to CoreLogic data, Sydney
and other private sector reports have shown: and Melbourne home prices fell by about 4%
during the six months to June 2019 to be down by
• Consumer confidence measures were largely
15% and 11%, respectively, since their peaks in 2017.
unchanged during the six months to June 2019 –
Across the capitals, Darwin and Perth recorded
with optimists slightly outnumbering pessimists.
falls of 4% and 2% in the six months to June 2019
(That said, since then, consumer sentiment has
to be down 30% and 20%, respectively, since their
fallen sharply due to concerns about the economic
peaks. Most regions (except in WA) reported small
outlook and their financial situation.)
falls in prices, down only 3% during 2018/19 and
• Labour market conditions were mixed, with further since their peaks. Nationally, dwelling prices were
solid job and participation gains, but a small rise in down almost 7% during 2018/19 and about 8.5%
unemployment, relatively high underemployment since the peak in September 2017.
and subdued wages growth. Both full-time and,
• Annual growth in household debt slowed further
to a lesser extent, part-time employment have
during the six months to June 2019, with loans to
increased well above working age population
investors very subdued as well as some easing
growth and the participation rate has reached its
in loans to owner occupiers. Recent tightening in
highest level on record. The unemployment rate
prudential and bank lending standards and declining
rose to 5.2% in June 2019, compared with 5.0% in
house prices have been the main factors at play. After
December 2018, but still lower than 5.4% estimated
no growth for the past six months, annual growth of
a year ago. More broadly, the trend underutilisation
investor loans slowed to less than 1% in June 2019,
rate (both unemployed and under-employed
while annual growth of owner-occupied loans slowed
persons) was 13.5% in June 2019, compared with
to around 5% in June, compared to about 7% in late
13.3% in December 2018 and about 13.8% year ago.
2018. Other personal loans (such as credit cards and
Wages growth remained low in all states and most
equity-backed loans) contracted a bit further – down
industries, though it picked up a little to be about
by over 3% during the year to June 2019.
2.3% higher over the year.
4 02. Macroeconomic and financial context

Household assets, on average, are estimated
to have risen slightly during the six months to
June 2019 – a significant rebound in equity prices,
a rise in bond values and continued contributions
to superannuation more than offset a further fall
in both dwelling values and new construction.
As a result, the aggregate financial position of
households – as measured by household net
wealth (assets less debt) – was slightly higher
during the past six months. In aggregate, debt
to income has increased slightly with sluggish
growth in both debt and income, while debt
to assets (or leverage) has also risen slightly
as asset gains have been slightly outpaced by
increased debt. Debt servicing burdens (relative
to incomes) have increased slightly.
• Aggregate household financial stress indicators
(such as housing and other loans in arrears
and property possessions) were low generally,
but slowly rising and disparate. Households,
on average, were coping well with debt servicing
burdens due to still relatively low borrowing costs
as well as subdued income gains and continued
employment.
As this report highlights, underemployment and
falling house/apartment prices do present current
challenges to some households – especially recent
dwelling buyers with newer larger mortgages and
lower incomes. Furthermore, some households
have debt levels that make sense in ‘good’ times
not allowing for the fact that ‘bad’ times may arise
unexpectedly. Other households are close to their
maximum risk position, not taking into account that
loan rates inevitably will rise significantly from record
lows. There are also households with low incomes –
dependent on government assistance – significantly
stressed by rental payments and regular expenses,
with a lack of savings for a financial emergency.
02. Macroeconomic and financial context 5

How is
the index
calculated?
The Household Financial Comfort Index quantifies how comfortable
Australian households feel about their financial situation by asking
respondents to rate their household financial comfort, expectations
and confidence on a scale of 0 to 10 across 11 measures:
Comfort level with the

Short-term
overall financial situation
cash savings
of the household
Changes in household
Long-term investments
financial situation over
(including superannuation)
the past year
Anticipated changes The level of

in the next year household debt
Confidence in the
Overall net wealth
household’s ability
of the household
to handle a financial
emergency (loss of
income for three months) The household’s
anticipated standard
of living in retirement
Comfort levels with
household income
Cost of living
expenses
6 03. Overall fall in financial comfort.

03.
Overall fall in
financial comfort.
3.1 Household Financial Comfort Index goes down a bit.

The Household Financial Comfort Index (see Figure 1)
decreased by 1% to 5.50 out of 10 over the six months
to June 2019. It remains slightly above the historical
average (5.46 out of 10) since the survey began over
seven years ago.
5.9
5.8 5.78
5.7
5.59
5.6 5.56
5.50 5.52 5.51 5.49
5.50
5.5
5.39
5.4 5.44
5.41 5.41
5.37
5.3 5.33
5.29
5.2 Household Financial
5.20 Comfort Index
5.1 Long-term average

Oct 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19
Figure 1 – Changes in the Household Financial Comfort Index. Scores out of 10
03. Overall fall in financial comfort. 7

3.2 How did financial comfort change across groups with low,
medium and high financial comfort?
Figure 2 shows that households with ‘low’ levels the long-term average of 3.30 out of 10. In contrast,
of comfort largely accounted for the fall in comfort the overall comfort of households with a ‘mid’ level
over the past six months to June 2019. of comfort (index of 5–7 out of 10) rose a bit from
6.40 to 6.44 out of 10, while households with relatively
Of all households, those with ‘low’ financial comfort
‘high’ comfort (index of 8–10 out of 10) fell a bit
(between 0–4 out of 10) reported a significant fall
from 8.62 to 8.57 out of 10, leaving both cohorts of
in overall comfort – down 5% to 3.12 during the six
‘mid’ and ‘high’ comfort levels around their historical
months to June 2019, a bit below the low recorded
averages in mid-2019.
a year ago and significantly below
8.8
8.7
8.6
8.5
Households with
high-level financial
8.4 comfort (8–10)
Figure 2a – Household Financial Comfort Index, by levels of comfort. Scores out of 10
6.6
6.5
6.4
6.3
Households with
mid-level financial
6.2 comfort (5–7)
Figure 2b – Household Financial Comfort Index, by levels of comfort. Scores out of 10
3.5
3.4
3.3
3.2
Households with
low financial
3.1 comfort (0-4)
Figure 2c – Household Financial Comfort Index, by levels of comfort. Scores out of 10

3.3 How did the key drivers of financial comfort change?
Figure 3 shows the 11 components that make up the standard of living in retirement (–1%) and the ability
Household Financial Comfort Index, and all except to cope with a financial emergency (–1%). The only
two drivers fell slightly during the six months to June components of the comfort index that improved
2019, contributing to the overall decline. slightly were comfort with cash saving (0.4%) and
investments (1%).
The biggest fall in comfort was with ‘net wealth’ –
down by 3% to 5.54 out of 10, to return to around its In summary, household overall comfort fell mainly
low of December 2016. The fall in net wealth is mainly due to deterioration in terms of households’ financial
equated with falls in house prices across most capital balance sheet as measured by their net wealth
cities, but particularly in Sydney and Melbourne. (home and investment properties, shares and
other financial assets less all debts) and to a lesser
Most other components fell by 1–2% during the
extent their cash flows (incomes, living expenses
past six months, including recent changes to financial
and cash savings) and feelings about their financial
situation (–2%); current financial situation (–2%);
situation (past year, current and next year as well
expected changes to financial situation (–2%); living
as anticipated in retirement).
expenses (–2%); debt (–1%); income (–1%); anticipated
6.80
6.50
6.30
6.00
Living expenses
5.80 Debt (all sources)
Current financial
5.50 situation
Income
5.30 Net wealth
Expected changes
5.00 to financial situation
Anticipated standard
4.80 of living in retirement
Recent changes
4.50 to financial situation
Savings
4.30 Investments
Ability to cope with
4.00 a financial emergency
Figure 3 – The 11 components that make up the index, with levels of comfort over time. Scores out of 10

3.4 Comfort with net wealth mainly drives the fall.
Figure 4 shows comfort with net wealth – as Comfort with net wealth fell across most household
measured by what would be left in cash if you sold incomes (except low incomes less than $40,000 p.a.)
all your assets and paid off all your debts – fell the as well as in all states and territories in both metro
most significantly, down by 3% to 5.54 out of 10, and regional areas.
well below the long-term average of 5.66 and closer
to the lows of the past seven years.
7.0
6.5
6.04
6.0 5.85
5.72 5.74
5.61 5.67 5.68
5.5 5.67 5.65 5.69
5.51 5.50 5.49 5.58 5.54
5.54
5.0
4.5
4.0
Figure 4 – Comfort with households’ level of wealth. Scores out of 10

Furthermore, in terms of mortgage status, the falls of (negatively) gearing property investments buoyed
in residential property prices significantly impacted property investors’ comfort with net wealth post the
the comfort of net wealth of households with recent Federal Election. Coincidentally, over the six
mortgages on their homes and/or investment months to June 2019, property investors lowered their
properties. For example, comfort for households expectations for price gains in investment property
with only a mortgage on their home fell by 7% to during the next year (see Figure 40 on page 44).
5.06 during the six months to June 2019 and those
For those without any mortgages, comfort with net
with a mortgage on their home and investment
wealth was unchanged at about 5.53 or similar to
property fell, to a lesser extent, by 3% to 6.59. In
the average across all households, including comfort
contrast, comfort with net wealth of households
with net wealth among home owners (up 3% to 7).
with gearing or a mortgage on only their investment
Renters’ comfort with their net wealth remained
property rose significantly – up 8% to 6.91 in June
relatively low – broadly unchanged at 4.16.
– to almost as high as owner occupiers without a
mortgage. Put another way, the continued benefits
8.0
7.0
6.91 7
6.82 6.81
6.59 6.61 6.72
6.0 6.37
6.25 6.09
5.86
5.55 5.51 5.53
5.45
5.0
5.06
4.0 4.13 4.16
3.0
Investors Investors and All investors Owner occupiers All with All owner occupiers Households Owner occupiers Renters
only owner occupiers with a with only a a mortgage with any mortage without a without a mortgage
mortgage home mortgage mortgage
Dec-18
Figure 5 – Comfort with households’ level of wealth by home ownership. Scores out of 10 Jun-19

3.5 A bigger fall in comfort prevented by slight increases
in investments and savings.
A slight rise in comfort with both cash investments The increase in comfort with investments is connected
and cash savings prevented the overall financial with strong rises in local and global equity prices,
comfort of households falling further during the which appear to have offset any concerns with falls in
six months to June 2019. the values of residential property investments and low
returns on bank deposits. Comfort with investments
Figure 6 shows overall ‘comfort with investments’
was up for most households, but particularly those
increased by 1% to 5.01 out of 10 in June 2019 and
who own their own home outright (7% to 6.21), as well
remains slightly higher than the medium-term average
as retirees (6% to 5.41) and, to a greater extent, geared
outcome of 4.88 since the survey began. Investments
investors in only residential property (up 14% to 7.04).
include investment properties, shares, bonds, managed
funds and superannuation and bank deposits.
6.0
5.33
5.5
4.92 4.99 4.99 5.01

5.0
4.74
4.82 4.86 4.85 4.85 4.94 4.93 4.96
4.80
4.5
4.56
4.49
4.0
3.5
Figure 6 – Comfort with level of investments. Scores out of 10

As illustrated in figure 7, of the three in four households – up 11% to 8.3 in June 2019, with the turnaround
with private superannuation (in accumulation or in equity values and rise in bond prices. Household
pension mode), overall comfort of households was comfort across most other levels of super balances
steady over the past 6 months and 2018/19 as a whole. fell over the past 6 months on average, down 3% to
Only comfort of households with large superannuation 5.6. Those without any super was up slightly to 4.9
balances (more than $1 million) rebounded strongly in June 2019.
9.0
8.27
8.0
7.39 7.42
7.0
5.98 6.03
6.7
6.0
5.0 5.26 5.08

4.8 4.89 4.95
4.23
4.0
No super Less than $20,001–$100,000 $100,001–$500,000 $500,001–$1,000,000 More than
$20,000 $1,000,000
Dec-18
Figure 7 – Overall household financial comfort by superannuation Jun-19
Figure 8 shows overall comfort with ‘short-term no children’, up 8% to 5.82. Meanwhile, ‘single parents’
cash savings’ remained stable (0.4%) to 5.09 during continued to record the lowest ‘comfort with cash
the past six months to be a bit above the historical savings’ (3.61) – mainly reflecting the low comfort
average. Highest ‘comfort with cash savings’ of those single parents dependent on government
continued to be among ‘young singles/couples assistance (index of only 1.62).
5.6
5.40
5.4
5.2
5.06 5.07 5.08 5.07
4.98 4.97 5.09
5.0
4.90
4.94 4.93
4.89
4.8 4.84
4.83 4.81
4.6
4.60
4.4
Figure 8 – Comfort with households’ current level of cash savings. Scores out of 10

3.6 Weakening job market also driving lower financial comfort.
Financial comfort among Australian households Across households, over 70% of single parents –
also eased as a result of the weakening job market both working and/or on government assistance
– illustrated by high levels of underemployment, – expected it would be difficult to find another job,
with significant levels of casual and part-time workers compared with 65% of empty nesters and 62% of
looking for more work, and significant job insecurity couples with older children. On the other hand, over
as well as increased difficulty expected in finding half of young singles/couples without children expect
a new job. that it would be easy to find another job, but only
25% of older generations (aged 50 and over) had
Workers who expected that it would be difficult to
similar expectations.
find a new job increased by seven percentage points
to over 1 in 2 employees – the highest recorded
since late 2016. Similarly, the number of workers who
reported it would be ‘easy to find another job in two
months’ fell by four points to 40% (see Figure 9 below).
70%
60%
50%
40%
30%
Difficult
Easy
20%
Don’t know
10%
0%
Figure 9 – Ease of finding a new job in next two months if became unemployed

Across the workforce, 70% of casual workers and, to
a lesser extent, about 60% of both self-employed and
part-time workers reported it would be difficult to
find another job if unemployed. In contrast, almost
50% of full-time workers felt it would be easy to get
a new job. Over the six months to June 2019, workers
expected it to be more difficult to get a new job across
all parts of Australia. WA was reportedly the most
difficult job market, with over 60% expecting it would
be difficult, while the easiest labour market was reported
by NSW workers (at 46%). About two-thirds of workers
aged over 50 years expected it would be difficult to find
another job (see Figure 10a, b and c below).
80%
70%
61% 62%
60%
48%
40% 45%
29% 30%
20% 22%
Difficult
0% Easy
Full-time employed Part-time employed Casual Self-employed
Figure 10a – Ease of finding a new job in next two months by labour force
80%
61%
60% 54% 53%
47% 50%
40% 46%
39% 41%
31% 36%
20%
Difficult
0% Easy
NSW VIC QLD WA SA/NT
Figure 10b – Ease of finding a new job in next two months by state
80%
67% 66%
60% 53% 54%
50% 52% 49%
40%
45%
42% 38%
39% 39%
20% 26% 25%
Difficult
0% Easy
Male Female 18-29 30–39 40–49 50–59 60+
Figure 10c - Ease of finding a new job in next two months by gender and age

Figure 11 also shows a significant part of the
workforce continued to lack job security, with 26%
of workers feeling ‘insecure’ in June 2019 (down one
point), albeit significantly down from the peak of
34% in December 2016.
0.8
0.7
0.6
0.5
0.4
0.3 Secure
Insecure
0.2 Don’t know
0.1
0.0
Figure 11 – Feeling of security in job in past month
As noted below in Figure 12, a significant number

of ‘part-time’ and ‘casual’ workers continued to
seek more hours and full-time work. While 60%
are happy with their number of work hours in June
2019, 35% would prefer to work more hours – on
average, over 22 hours per week for both casual
and part-time employees.
70%
vv
60%
60%
50%
40%
35%
30%
20%
10%
5%
0%
I am happy with the hours I currently I would prefer to work fewer I would prefer to work more
work on average per week hours on average per week hours on average per week
Figure 12 – Preference for work hours (part-time and casual employees)

3.7 Comfort with income eases.
The weakening in Australian labour market conditions Figure 13 shows a 1% decrease in comfort with income
also flowed through to a weakening in income gains, to 5.69 in June 2019. Falls were across most states,
a key driver of financial comfort among households, except NSW which remained stable, and across the
as it can create issues with living expenses and debt workforce and all ages, except those aged 18–29 who
servicing. Wage growth continued to be historically reported an 11% increase in comfort with income.
slow and resulted in a small fall in households’ overall
feelings about their incomes. Low interest rates on
bank deposits and fixed interest investments also
weighed on non-wage incomes for some households.
6.01
6.0
5.9
5.86
5.8 5.79
5.77
5.74 5.72
5.7 5.72
5.69
5.6 5.65
5.62 5.61
5.5 5.58 5.57

5.56
5.55 5.55
5.4
Figure 13 – Comfort with current household income. Scores out of 10

As outlined in Figure 14, the fall in comfort with
income was also reflected in a falling proportion
of households reporting annual income increases
in the six months to June 2019 (down two points
to 36% of workers), while those reporting falls in
income remained about the same at 25% and those
experiencing income remaining the same increased
by three points to 40%, above the long-term average.
45%
40%
Income remained
the same
35% Income increased
Income decreased
30%
25%
20%
Figure 14 – Household income changes during past year

Most income gains reported by full-time workers.
Figure 15 shows which areas of the labour force were
more likely to experience income gains, with gains
most commonly reported by full-time workers (50%),
compared to only 25% of casual workers and 35% of
part-time workers (see more below).
60%
50%
50% 48%
40%
35% 35% 36% 34%

30% 33%
30% 30%
27% 25%
20%
16%
10% Income decreased
Same
0% Income increased
Full-time employed Part-time employed Self-employed Casual
Figure 15 – Income changes over past year across the labour force

Households with higher incomes experience a higher propensity for income gains.
Figure 16 shows which income brackets received with incomes $40,000–$75,000 p.a. reported ‘income
the most income gains over the past year. For the increased’ (down four points). In contrast, only 22% of
sixth consecutive report, households with higher households with annual incomes of less than $40,000
annual incomes have continued to experience more p.a. reported ‘income gains’ (down two points) while
income gains than households with lower annual 40% reported cuts to income (up four points and
incomes. Among households with annual incomes significantly more than any other cohort).
over $100,000 p.a., 55% recorded ‘income increased’
Put another way, there were fewer income gains during
during the past 12 months (down one point since
the past year across households, while households
December 2018), while 38% of households with
with the highest incomes continued to be much
incomes $75,000–$100,000 p.a. reported ‘income
more likely to report income increased.
increased’ (down 10 points) and 28% of households
100%
14%
25% 21% 24%
80% 40%
31%
60%
40% 37%
51%
40% 38%
55%
20% 36% 38%
28% Income decreased
22% Income remained the same
0% Income increased
Total Under $40K $40,001 $75,001 Over $100K
to $75K to $100K
Figure 16 – Income changes over the past year across various income bands

3.8 Comfort with monthly expenses falls, while living costs remain
a key concern.
Connected with the weakening labour market and falling comfort with incomes was the small fall in comfort
with living expenses. This also contributed to the fall in the overall financial comfort of households. As
illustrated in Figure 17, comfort with the ‘ability to pay regular expenses’ decreased by 2% to 6.50 during
the six months to June 2019.
6.8
6.7 6.67
6.60 6.60
6.6
6.52 6.56
6.50 6.49
6.5
6.50
6.4 6.42 6.42
6.41 6.40
6.36
6.3 6.27
6.26
6.2
6.1 6.13
6.0
Figure 17 – Comfort with households’ ability to pay regular expenses. Scores out of 10

Consistent with this, of the 31% of households that June 2019, and much higher than the next most
indicated that their financial situation had worsened cited reasons: change in job arrangements/job
over the past year, there was a marked increase in security (13%), change in income (12%) and no/low
the number citing the cost of living as the reason wage growth (11%). See Figure 18.
– up by 7 points to 43% during the six months to
Cost of necessities/inflation/cost of living (e.g. fuel, utilities, groceries)

43%
Change in employment arrangements/job security
13%
Change to my income/disposable income/level of wages
12%
No/low wage growth
11%
Change to support from government/legislation
9%
Change to expenditure/spending habits
8%
Level of savings/cash on hand
8%
Value of cash investments (e.g. superannuation, managed funds, shares)
6%
Medical/health expenses/issues
5%
My level of personal/household debt (e.g. credit card bills, money owed on personal loans)
5%
Being able to make ends meet/afford some extras
4%
Situation has worsened - general
3%
Changes to personal taxes
2%
Ability to purchase and/or pay off property
2%
Ability to maintain lifestyle in retirement / standard of living in retirement
1%
How the global economy will affect Australia
1%
Figure 18 – Top reasons why households' financial situations worsened in the past six months

All households were again asked which aspects of their • The next three top worries level of savings/cash on
finances cause the ‘biggest worries’ and that ‘they feel hand (remained stable at 34%), being able to make
most positive about’ (see Figure 19). ends meet (increased by three points to 31%), and
ability to maintain lifestyle in retirement/standard
• The ‘cost of necessities’ (e.g. fuel, utilities and
of living in retirement (remained steady at 31%).
groceries) continued to be the ‘biggest worry’
of households, although the proportion nominating • Concern about the global economy fell by four
this as their biggest worry fell by two points points to 25%, while concern about the impact of
to 44% during the six months to June 2019. legislative change to financial situation increased
In contrast, only 10% of respondents reported four points to 19%.
the ‘cost of necessities’ as their ‘biggest positive’
– slightly higher over the past six months.
Cost of necessities (e.g. fuel, utilities, groceries)

-44% 10%
Level of savings/cash on hand
-34% 19%
Being able to make ends meet
-31% 32%
Ability to maintain lifestyle in retirement/standard of living in retirement
-31% 15%
How the global economy will affect Australia
-25% 6%
Security of my job or my partner's job
-23% 17%
Impact of legislative change on my financial situation
-19% 5%
Level of government assistance available
-18% 10%
My level of personal/household debt (e.g. credit card bills, money owed on personal loans)
-18% 21%
Value of cash investments (e.g. superannuation, managed funds, shares)
-16% 12%
Ability to purchase and/or pay off property to live in
-14% 10%
Changes to personal taxes
-10% 7%
Ability to purchase and/or pay off an investment property
-6% 4%
Other Biggest worries
0% 1% Biggest positives
Figure 19 – Biggest financial worries and positives

3.9 Despite falling loan rates, comfort with debt eased.
Despite lower loan rates and expectations of further holders (mainly personal loans and credit cards)
cuts in the RBA’s official cash rate, comfort with was unchanged at 6.9 while overall financial comfort
debt eased over the past six months to June 2019. of home owners (occupiers with no mortgage) rose
Significant falls in comfort with debt among owner by 4% to 6.54. In contrast, comfort with debt among
occupiers with a mortgage more than offset gains in geared investors actually improved markedly by
comfort with debt by investors in residential property 11% to 6.9 – arguably boosted by the government’s
and, to a lesser extent, home owners. commitment to maintain negative gearing on
investment properties. Put another way, comfort
Overall comfort with debt fell slightly by 1% to 6.24
with debt among most households with mortgage
out of 10 during the six months to June 2019, but
debt (except geared investors in residential property)
still above the long-term average of 6.13, as outlined
actually fell during the six months to June 2019.
in Figure 20.
On the other hand, many households continued to
Comfort with debt fell the most across households
take advantage of the low loan rate environment to
stressed about housing payments (down 8% to 4.8),
pay down debt, with 59% stating they expect to pay
households paying off a mortgage on their home
more than the minimum repayment on their debt,
(down 6% to 5.2), households with annual incomes
up one point from the previous survey. This lower
over $100k (down 7% to 6.4), and households with
comfort with mortgage debt arguably reflects the
higher property exposures (including over $1m, down
negative impact of falling property prices on the net
6% to 6.9). Comfort with debt for non-mortgage
wealth of these households.
6.5
6.4 6.36
6.31 6.33
6.3 6.29 6.27
6.2 6.24
6.16 6.19
6.1
6.03
6.0 5.96 6.04 6.04
6.01 6.00
5.9
5.93
5.87
5.8
5.7
5.6
5.5
Figure 20 – Comfort with households’ current level of debt. Scores out of 10

Figure 21 shows that when it comes to managing debt
over the next 6−12 months, only 6% of households did
not expect to be able to meet minimum payments on
debt – two points less than expectations reported six
months ago. There remained about 60% of households
that expected to be able to pay either a bit more
(33%) or a lot more (26%) than minimum repayments
in the next 6–12 months, the same as six months ago.
50%
40%
35% Can just manage

to make minimum
30% payments on my debt
Can pay a little bit more
25% than the minimum
payments on my debt
20%
Can pay a lot more than
15% the minimum payments
on my debt
10% Cannot meet my
required minimum
5% payments on my debt
0%
Figure 21 – Ability to manage debt over the next 6–12 months

3.10 More people saving more and fewer people overspending
and by less.
Consistent with issues with income and expenses, Households breaking even each month increased by
the proportion of households saving, overspending an equivalent amount – up two points to 41% – and
and breaking even deteriorated slightly. Figure 22 those spending more than they earn each month
shows that in the six months to June 2019, the (that is, overspending by running down savings or
proportion of households reporting that they saved borrowing more) increased by one point to 10%.
each month fell slightly by three points to 48%.
60%
50%
We typically spend
40% less than we earn
each month
We typically spend
30% all of our income
and no more
We typically spend
20% all of our income
and more
10%
0%
Figure 22 – The proportion of households that save, break even or overspend each month

As a result, ‘net savers’ – i.e. the proportion of those (10%) – fell from 42% to 38% of households, below
‘spending less than they earn each month’ (48%) the long-term average of 39% (see Figure 23).
minus those ‘spending all of their income and more’
50%
45%
42% 42%
41% 41% 41%
40%
39% 39%
38% 40%
39%
38%
37% 37% 37% 37%
35%
33%
30%
Figure 23 – ‘Net savers’ (proportion saving monthly minus those spending their income or more monthly)
Figure 24 shows a tale of two groups, with the increased by 18% to $535 per month. In essence,
estimated average amount savers were saving those able to save (higher income households) saved
increasing by about 4% to $893 per month, while more, while those faced with income constraints to
at the same time, the estimated average amount save, overspent more.
over-spenders/dis-savers overspent each month
$1000
$905
$885 $870 $893
$900
$835 $888
$850 $850 $798 $862
$837 How much savers
$800 $773 save each month
$804
$700 $779
How much spenders
$700 $735 $745
overspend each month
$625
$613
$665 $584
$600
$535
$540 $500
$500 $473 $529 $525
$483
$445 $453
$4 00 $418
$395
$300
Figure 24 – Estimated amount savers saved and over-spenders overspent each month

Savings levels improve among households with small balances.
Those able to save contributed to a slight increase term deposit and mortgage offset account) between
by 3 points to 52% in the proportion of households $0 and $10,000 while other savings levels remained
holding small amounts of savings (savings account, fairly stable from six months ago (see Figure 25).
70%
60%
50% Less than $10,000

$10,001 to $50,000
40% $50,001 to $100,000
Above $100,000
30%
20%
10%
0%
Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19
Figure 25 – Cash savings currently held – proportion of households

Figure 26 shows that in line with a small fall in net
savers, ‘confidence in the household’s ability to handle
a financial emergency’ fell slightly – down 1% to 4.77,
but still well above the long-term average of 4.57.
6.0
5.5
5.0 4.93
4.82 4.83
4.75
4.62
4.52 4.52 4.77 4.77
4.46 4.68
4.5
4.50
4.39
4.29 4.28
4.0
4
3.5
Figure 26 – Comfort with ability to handle an emergency. Scores out of 10
In the latest survey, confidence in households’ ability high-income households (over $100,000 p.a.).
to handle a financial emergency ranged from a very Single parents had, by a significant degree, the
score of 1.6 for households with less than $1,000 in lowest comfort in their ability to handle a financial
cash savings to over 8.0 for households with over emergency (3.35) – especially those dependent on
$100,000 in cash savings, and from 3.3 for low-income government assistance (1.4)
households (less than $40,000 p.a.) to 5.8 for

“Our financial
situation has
improved
because I am
getting more
hours at work and
our property has
gone up in value
due to home
renovations.”
MIDDLE-AGED COUPLE, NO CHILDREN,
NSW
30 04. Overall financial comfort by different cohorts.

04.
Overall financial comfort
by different cohorts.
This section has more details on the overall financial comfort index, providing
views of overall financial comfort by different cohorts – life stage, age/generation,
location, employment, annual incomes, housing tenure and mortgage status. In
terms of overall comfort, there is a great deal of disparity and/or variation across
these various cohorts of Australians.
4.1 Life stage: financial comfort remains mixed.

During the six months to June 2019, there remained Young singles/couples reported the highest comfort
wide variations in financial comfort between at 6.17, followed by retirees at 5.97, while single
households at various life stages – some households parents continued to have the lowest comfort of
saw improved comfort, while others’ comfort fell. any household.
6.5
6.0 Young singles/couples

with no children
Retirees
5.5
Couples with
older children
5.0 Couples with
young children
Middle-aged singles/
4.5 couples with no children
Empty nesters
4.0 Single parents
Figure 27 – Overall financial comfort across different household types. Scores out of 10

4.2 Generations: financial comfort remains mixed.
The oldest and youngest generations reported (down 6% to 5.49), while Gen X reported the
the highest comfort of all generations, with Gen Z lowest comfort of any generation at 5.09 out of 10.
reporting 6.24 and Builders reporting 6.19 out of 10. See Figure 28.
Baby Boomers reported the biggest fall in comfort
7.5
7.0
6.5
6.0
Gen Z
5.5
Builders
Gen Y
5.0
Baby Boomers
4.5 Gen X
Figure 28 – Overall financial comfort across generations. Scores out of 10

Students feeling the pinch.
‘Students’ continued to report markedly lower levels and ‘young singles/couples with no children’
of financial comfort (4.23 out of 10) in June 2019, (up 8% to 6.17). See Figure 29.
compared to both ‘18–29 year olds’ (up 9% to 6.28)
6.5
6.0
5.5
5.0
4.5 18–29 year olds

Young singles/
couples with no children
4.0 Students
Figure 29 – Overall financial comfort across young singles/couples and students. Scores out of 10

4.3 States: financial comfort remains mixed.
Overall financial comfort fell in Queensland, Tasmania followed by Victoria (5.55) and Queensland (5.44).
and South Australia/Northern Territory, and remained South Australia/Northern Territory had the lowest
relatively unchanged in all other states and territories. financial comfort at 5.11 (see Figure 30).
Highest financial comfort was found in NSW/ACT,
6.1
5.9
5.7
5.3
5.1 NSW/ACT
VIC
4.9 QLD
WA
4.7 SA/NT
Figure 30 – Overall financial comfort across different states and territories. Scores out of 10
Metropolitan versus regional comfort divide narrows as house prices correct.

In June 2019, metropolitan cities continued to record significantly higher financial comfort
(down about 1% to 5.57) than regional areas (down 2% to 5.30) (see Figure 31).
6.0
5.5
5.0
Metro
4.5 Regional
Figure 31 – Comfort index across metropolitan and regional Australia. Scores out of 10

The trend of slightly higher household financial
comfort in metropolitan households in Sydney and
Melbourne is only evident across Victoria and NSW.
The gap has narrowed as property prices have fallen
to a greater extent in metropolitan Sydney and
Melbourne. Nevertheless, Sydney continued to be
the most financially comfortable metropolis across
Australia (5.88 out to 10), followed by Melbourne
(5.73 out of 10). See Figure 32.
5.90 5.88
5.80
5.73
5.70
5.64
5.60 5.57
5.55
5.50
5.50
5.44
5.40 5.39
5.36
5.30
5.30 5.27
5.20 5.01
Melbourne
Australia
Adelaide
Regional
5.10
Brisbane
Sydney
5.10
Metro
Perth
NSW
QLD
WA
VIC
SA
5.00
Figure 32 – Comfort index across larger states and metropolitan areas. Scores out of 10

4.4 Workforce segments: financial comfort deteriorates a lot.
Most workforce segments reported significantly lower Full-time workers continued to report the highest
financial comfort during the six months to June 2019. financial comfort across the workforce, while the
Part-time workers reported the biggest fall (–4% comfort of causal workers remained a lot lower
to 5.10), followed by self-employed (–3% to 5.57), (see Figure 33).
full-time workers (–3% to 5.86) and, to a lesser
extent, casual workers (–1% to 5.02).
6.5
6.0
5.5
Full-time employed
5.0
Self-employed
Total
4.5
Part-time employed
4.0 Casual
Figure 33 – Comfort index across the workforce. Scores out of 10

4.5 Household incomes: financial comfort varies a lot.
Comfort among low-income households continued In the latest survey, comfort among households with
to lag well behind the comfort of average/middle- very high levels of annual income (above $200,000
income households and, to a greater extent, p.a.) reapproached a record high, after a rise of 10%
high-income households. to 7.45 in June 2019. In contrast, comfort across all
other income bands fell over the six months to June
2019. See Figure 34.
8.0
7.5
7.0
6.5
6.0
5.5
$200,001+
5.0
$100,001 to $200K
4.5 $75,001 to $100K
$40,001 to $75K
4.0 Under $40K
Figure 34 – Overall financial comfort of households in different annual income bands

4.6 Housing tenure: financial comfort deteriorates a lot.
Figure 35 shows the gap in financial comfort fell by 2% to 4.67 in June 2019, while households
between those who own their home outright, those paying off their mortgage fell by 5% to 5.26. Only
with a mortgage, and renters with financial comfort the comfort of home owners who own their home
between these cohorts diverging again over the six outright increased, this time by 4% to 6.54 during
months to June 2019. The financial comfort of renters the six months to June 2019.
remained significantly lower than other tenures and
7.0
6.5
6.0
5.5
5.0
4.5 Own home outright

Paying off mortgage
4.0 Rent
Figure 35 – Overall financial comfort based on housing tenure. Scores out of 10

4.7 Mortgage status: financial comfort deteriorates a lot.
Financial comfort continued to vary a great deal across households depending on the status of mortgage
and ownership.
Figure 36 shows households with ‘mortgages on to a greater extent, households with only a home
investment properties only’ or who ‘own their own mortgage. This arguably reflects that households with
home outright’ continued to report higher financial investment loans tend to have both higher incomes
comfort than households with mortgages on their (before and after tax) as well as higher (net) wealth.
home and an investment property, and,
7.0
6.84
6.54 6.44
6.0
5.0
4.96
4.0
3.0
2.0
1.0
0.0
Own home Owner-occupier Owner-occupier and Investment
outright mortgage investor mortgage mortgage only
Figure 36 – Overall financial comfort of households with and without mortgages. Scores out of 10

“Everything is
going up except
our incomes.”
SINGLE PARENT,
SOUTH AUSTRALIA
40 05. Other findings.

05.
Other
findings.
5.1 Rent payment stress rebounds slightly in past six months.

The proportion of households contributing over 30% $40,000 p.a. (with about 80% experiencing stress)
of their disposable household income towards rent and $40,000 to $75,000 p.a. (70%). There were also
or paying off a mortgage – a common indicator of relatively higher levels of housing payment stress in
financial stress – rose from 47% to 52% during the Victoria (56%) and New South Wales (55%) than in
six months to June 2019, partly reversing the easing other parts of Australia.
in housing payments stress reported in the previous
Figure 37 shows that for renters, those contributing
couple of surveys. This was mainly due to a rise in
more than 30% of their income towards rent rose to
housing stress among renters. That said, very high
62% from 51% over the past six months to June 2019,
levels of household payment stress continued to
compared with 72% in December 2017 and 67% a
be reported by households with incomes less than
year ago.
35%
33%
32%
30%
26% 26%
25% 24%
22%
20%
20% 19%
18% 17%
14% 14% 14% 15% 14% 14%

15%
12% 12%
10% 10% 9%
8% 7%
7% December 17
6%
5% June 18
2% 2% 2% December 18
1%
0% June 19
10% or less More than More than More than More than More than Greater
10% up 20% up 30% up 40% up 50% up than 60%
to 20% to 30% to 40% to 50% to 60%
Figure 37 – Percentage of household disposable income paid towards rent

Figure 38 shows that for households with home
loans, the proportion paying more than 30% of
their household income towards a mortgage was
relatively unchanged at 43% – much the same as
previous reports.
35%
31%
30%
30% 29%
25% 24%
23% 23% 23%
22% 22%
20%
20% 19%
18%
15%
13% 13%
12%
10%
10% 9% 8%
7% 7% December 17
6% 6%
5% 5%
5% 4% 4% 4% 4% June 18
December 18
0% June 19
10% or less More than More than More than More than More than Greater
10% up 20% up 30% up 40% up 50% up than 60%
to 20% to 30% to 40% to 50% to 60%
Figure 38 – Percentage of household disposable income paid towards a mortgage

5.2 Confidence in the ability to raise $3,000 for an emergency.
Confidence in ‘the ability to raise money for an emergency, compared to 38% 12 months ago.
emergency’ deteriorated slightly in the period. Also, 20% of households – just above the long-term
Figure 39 shows that in June 2019, 35% reported average – reported that they do not think they could
they could easily raise $3,000 in a week for an raise the money.
35%
32%
39%
34%
36%
We could easily 35%
raise the money 36%
37%
37%
38%
36%
35%
35%
We could raise
32%
the money but
would involve 32%
some sacrifices, 33%
such as reduced 34%
spending or 35%
drawing money 35%
from an existing 35%
or new loan 37%
account or 33%
credit card 37%
35%
12%
12%
We would 11%
have to do 13%
something 11%
drastic to raise 12%
the money, like 10%
selling an 11%
important 10%
possession 9% Dec-13
11% Jun-14
10%
Dec-14
18%
Jun-15
24%
18% Dec-15
21% Jun-16
I don't think 20%
Dec-16
we could raise 19%
the money 19% Jun-17
18% Dec-17
16%
Jun-18
20%
15% Dec-18
20% Jun-19
Figure 39 – Ability to raise $3,000 in a week for an emergency

5.3 House price expectations remain positive.
In somewhat stark contrast to the actual fall in dwelling Among Perth residents, only a quarter expected
prices during the past 12 months, the majority of higher prices and almost 20% expected further falls
households living in their homes and investors were during 2019/20. In Brisbane, only 7% expected lower
even more positive than six months ago about the home prices and over 40% expected home values to
12–month outlook for dwelling prices. begin to rise.
Indeed, 41% of households living in their homes Investors were relatively more optimistic about prices,
expected their dwelling prices to rise during 2019/20, albeit less so than six months ago: 46% of investors
while 11% expected the value of their home to fall expected the value of their investment properties to
(including only 3% who expected dwelling prices to fall rise during the next 12 months (down seven points),
by a lot). Expectations of owner occupiers also varied while only 9% anticipated a fall (including 2% who
significantly across major capital cities – with occupiers anticipated a big fall). Investors in Sydney were
in Brisbane and, to a lesser extent, Sydney and the most optimistic about property values (with
Melbourne a lot more optimistic than Perth residents. expectations for rises of 54% v expectations of falls
of only 6%), followed by Melbourne (44% v 19%) and
Brisbane (50% v 11%).
60%
53%
50%
46%
40% 41%
39%
30%
20%
13%
10% 11% 11% December 18
9% June 19
0%
Owner occupiers: Investors: Owner occupiers: Investors:
Increase increase decrease decrease
Figure 40 – What do you think is likely to happen to the value of your property in the next 12 months?

5.4 Retirement.
Comfort with anticipated standard of living The rise was broadly based across younger
in retirement also eases. generations (Gen Z and Gen Y), while older
generations (Gen X and Baby Boomers) saw
Comfort with households’ ‘anticipated standard of
their comfort with anticipated retirement fall.
living in retirement’ fell by 1% to 5.20 during the six
By households, single parents anticipated the lowest
months to June 2019. This is marginally above the
standard of living in retirement with an index of 3.88.
historical average of 5.07 out of 10 since the survey
By gender, women anticipated a much lower standard
began. See Figure 41.
than men, with respective scores of 4.79 and 5.64
in the latest survey.
5.46
5.5
5.23 5.27
5.18 5.19
5.08 5.06
5.20
5.0 4.88 5.11
5.01 5.02
4.88 4.88 4.94
4.78
4.5
4.0
Figure 41 – Comfort with standard of living in retirement. Scores out of 10

Minority of households continue to expect to fund
retirement themselves.
Currently, about one out of five households
(22%) expect to ‘fund retirement with their own
superannuation’ (up one point in the past six months).
This is slightly more than an average of 19% since the
survey began. The number of households expecting
to ‘rely on the government pension’ during retirement
remained steady at 23%. A further 39% expected to
partly fund retirement with a government pension.
Finally, a significant proportion of households simply
did not know (17%).
21%
17%
20%
18%
Fund 18%
retirement 20%
with own 19%
money 20%
22%
18%
21%
22%
18%
23%
18%
24%
Rely on
19%
government
21%
pension only
19%
(no personal
21%
savings)
20%
23%
23%
23%
44%
45%
44%
Both (will 41%
use our own 46%
money as 43%
well as claim a 43%
government 42%
pension) 40%
42% Dec-13
40% Jun-14
39%
Dec-14
17%
Jun-15
15%
18% Dec-15
17% Jun-16
17%
Dec-16
16%
Don't know Jun-17
18%
17% Dec-17
18%
Jun-18
17%
16% Dec-18
17% Jun-19
Figure 42 – How will your household fund retirement?

Expected adequacy of income in retirement.
In June 2019, households’ expectations of the adequacy There remains a lack of awareness and passivity
of their income in retirement remained largely towards superannuation. In the latest survey:
unchanged. Around 62% of households expected to
• 25% either didn’t have a superannuation fund
be able to ‘afford essentials and extras’, while 38% of
or didn’t know what type of superannuation
households reported to be ‘unable to afford essentials’
fund they were in.
or have ‘no money left over afterwards’.
• Only 17% of Australians reported ‘building wealth
for retirement’ as a financial goal they’re actively
working towards.
10%
11%
9%
Won't be able 9%
to afford to 10%
10%
pay for essential 9%
items and 9%
services 8%
11%
10%
10%
29%
33%
Will only be able 29% 33%
to afford the 31%
essentials and 26%
won't have 29%
29%
money left 29%
over for 28%
anything else 27%
27%
28%
Will be able to
35%
afford the 34%
essentials and 36%
have money left 36%
over for eating 38%
36%
out occasionally, 35%
entertaining at 38%
home or 38%
occassion extra 37%
36%
likemusic,movies, 33%
books etc 20%
18%
21%
Will be able to 18%
afford the 21% Dec-13
19%
essentials and 20% Jun-14
extras like travel 18%
for holidays 18% Dec-14
19%
21% Jun-15
22% Dec-15
6%
Will be able to 5% Jun-16
afford the 5% Dec-16
essentials and 5%
6% Jun-17
extras, as well 6%
as have money 7% Dec-17
left over to help 6%
7% Jun-18
family and
6% Dec-18
friends 6%
7% Jun-19
Figure 43 – Expectations for adequacy of income in retirement

06.
Appendix a –
household statistics.
Net Wealth Household Income

Household Financial Average Average Household
Comfort Index Net Wealth Yearly Income
Young singles/couples
6.17 $395,000 $100,000
(<35yo) with no children
Single parents 4.36 $380,000 $59,000
Couples with young children 5.56 $502,000 $106,000
Couples with older children 5.55 $762,000 $98,000
Middle-aged singles/couples with
5.48 $420,000 $89,000
no children
Empty nesters (50+yo) 5.28 $609,000 $63,000
Retirees 5.97 $774,000 $54,000
48 06. Appendix a – household statistics.

07.
Appendix b –
methodology.
ME commissioned DBM Consultants to develop the To provide contextual insight for the Household
Household Financial Comfort Index with Economics Financial Comfort Index, respondents were asked
& Beyond. The research includes an online survey of to rate how comfortable they would be with their
approximately 1,500 Australians aged 18 years and current overall household situation if they were
older who do not work in the market research or feeling ‘occasional stress or worry’, and also if they
public relations industries. Fourteen waves of research were experiencing ‘financial problems which require
have been conducted every six months starting in significant lifestyle change’.
October 2011, but usually in the months of December
To collect data on how households felt about their
and June, with the latest conducted in June 2019.
financial situation via household financial comfort,
For analysis, the population sample was weighted
confidence with finances and anticipated change in
according to ABS statistics on household composition,
finances, we used 0–10 scales anchored by descriptive
age, state and employment status to ensure that the
terms ‘not at all comfortable’ to ‘extremely comfortable’
results reflected Australian households.
(comfort), ‘not at all confident’ to ‘extremely confident’
An extensive review of other financial health/comfort (confidence) and ‘worsen a lot’ to ‘improve a lot’, with
indices and academic literature suggested that a midpoint of ‘stayed the same’ (anticipated change).
a number of factors contribute to self-assessment
Questions to collect household actual financial data
of financial wellbeing and comfort. As such the
included those that asked for dollar amounts or dollar
ME Household Financial Comfort Index incorporates
ranges as well as actual behaviour (e.g. whether or
11 measures of how households feel about their
not their household was able to save money during
financial situation – these are:
a typical month).
• Comfort level with (1) the overall financial situation
of the household
• Changes in household financial situation (2) over
the past year and (3) anticipated in the next year
• Confidence in the (4) household’s ability to handle
a financial emergency
• Comfort levels with (5) household income, (6)
living expenses, (7) short-term cash savings, (8)
long-term investments, (9) debt, (10) overall
net wealth, and (11) the household’s anticipated
standard of living in retirement.
07. Appendix b – methodology. 49

Notes.
50
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ME 16th Household Financial Comfort Report June 2019 v2

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Household financial Sixteenth

Property price falls and a weakening labour market

The ME Household Financial Comfort Report

01. Executive summary. 2

02. Macroeconomic and financial context. 4

03. Overall fall in financial comfort 7

04. Overall financial comfort by different cohorts. 31

05. Other findings. 41

06. Appendix a – household statistics. 48

07. Appendix b – methodology. 49

Household financial comfort dragged down by residential property price

2 01. Executive summary.

01. Executive summary. 3

4 02. Macroeconomic and financial context

02. Macroeconomic and financial context 5

Comfort level with the

Anticipated changes The level of

6 03. Overall fall in financial comfort.

3.1 Household Financial Comfort Index goes down a bit.

5.1 Long-term average

Figure 1 – Changes in the Household Financial Comfort Index. Scores out of 10

03. Overall fall in financial comfort. 7

Figure 2a – Household Financial Comfort Index, by levels of comfort. Scores out of 10

Figure 2b – Household Financial Comfort Index, by levels of comfort. Scores out of 10

Figure 2c – Household Financial Comfort Index, by levels of comfort. Scores out of 10

8 03. Overall fall in financial comfort.

03. Overall fall in financial comfort. 9

Figure 4 – Comfort with households’ level of wealth. Scores out of 10

10 03. Overall fall in financial comfort.

4.0 4.13 4.16

03. Overall fall in financial comfort. 11

4.92 4.99 4.99 5.01

Figure 6 – Comfort with level of investments. Scores out of 10

12 03. Overall fall in financial comfort.

5.0 5.26 5.08

03. Overall fall in financial comfort. 13

14 03. Overall fall in financial comfort.

03. Overall fall in financial comfort. 15

Figure 11 – Feeling of security in job in past month

As noted below in Figure 12, a significant number

16 03. Overall fall in financial comfort.

5.5 5.58 5.57

Figure 13 – Comfort with current household income. Scores out of 10

03. Overall fall in financial comfort. 17

Figure 14 – Household income changes during past year

18 03. Overall fall in financial comfort.

35% 35% 36% 34%

03. Overall fall in financial comfort. 19

20 03. Overall fall in financial comfort.

03. Overall fall in financial comfort. 21

Cost of necessities/inflation/cost of living (e.g. fuel, utilities, groceries)

22 03. Overall fall in financial comfort.

Cost of necessities (e.g. fuel, utilities, groceries)

Figure 19 – Biggest financial worries and positives

03. Overall fall in financial comfort. 23

Figure 20 – Comfort with households’ current level of debt. Scores out of 10

24 03. Overall fall in financial comfort.

35% Can just manage

Figure 21 – Ability to manage debt over the next 6–12 months

03. Overall fall in financial comfort. 25

26 03. Overall fall in financial comfort.

03. Overall fall in financial comfort. 27

50% Less than $10,000

Figure 25 – Cash savings currently held – proportion of households

01. Executive summary. 2

02. Macroeconomic and financial context. 4

03. Overall fall in financial comfort 7

04. Overall financial comfort by different cohorts. 31

05. Other findings. 41

06. Appendix a – household statistics. 48

07. Appendix b – methodology. 49