Australian living standards return to trend growth
Latest Household Budget Report by SAS® and NATSEM finds –
- June Quarter living standards surprise on the upside
- Living standards gain enabled by weaker prices growth
- Renters most impacted by housing costs as share of income
The latest SAS-NATSEM Household Budget Report released today shows a return to trend growth in Australia’s long term household living standards and a healthy uptick for the quarter to end-June this year.
According to NATSEM’s Ben Phillips, "Living standards growth was a healthy 0.7 per cent during the end-June quarter, enabled by exceptionally weak growth in prices”. He added that growth was 1.7 per cent for the full 2014-15 financial year, in line with long term trend.
Pointing to the desirability of these quarterly reports being readily accessible, David Bowie, SAS Australia and New Zealand managing director, said, “They are interactive and available to anyone, cost-free, at www.sas.com/en_au/offers/natsem.html. We present them in a visual format to bring the raw numbers to life and deliver an immediate understanding of economic trends as they directly affect everyone in Australia.”
Household living standards for the year improved most in the Northern Territory and Victoria with increases of 2.6 and 2.2 per cent, respectively. The least gains were recorded by the ACT at 1.3 per cent and New South Wales at 0.8 per cent.
Cost of living pressures over the full year were generally slight everywhere and actually retreated in Tasmania and the Northern Territory. The highest price growth was in NSW but at a modest 1.2 per cent. The cost of living increased by only 0.5 per cent overall and this advantage was best enjoyed by higher income households, thanks to interest rate cuts leading to reduced mortgage repayments. Incomes remained subdued across the board, advancing by just 2.2 per cent.
Household budgets during the quarter were mainly impacted by increases in the costs of healthcare, alcohol, tobacco and household goods and services. Over the full financial year, the biggest cost increases were for alcohol and tobacco up $237; healthcare up $177; and food up $144. The main offsetting categories were mortgage repayments down $198 and transport costs down $139.
Housing costs were a special topic for this latest SAS-NATSEM report and the charts below provide cuts for the top quartile as well as give the median numbers. Housing costs measured included rents; interest on mortgage repayments; council rates; body corporate fees; repairs and maintenance; and interest on the cost of alterations. Overall, renters spent around 29.0 per cent of their total outgoings on housing compared with 18.9 per cent in the case of those purchasing and 8.0 per cent amongst outright owners.
Amongst lower income renters, 29.9 per cent of all expenditure goes on housing while for those with the lowest incomes the figure is above 40 per cent. For renters in the highest income group the figure is 23.9 per cent. There is little difference in housing expenditure shares amongst people purchasing their dwelling.
Median housing cost shares of expenditure were highest in the Northern Territory at 23.6 per cent followed by Queensland and NSW at 18.1 and 17.7 per cent, respectively. The lowest median shares were in Tasmania at 13.8 per cent and Victoria at 13.1 per cent.
The focus on housing in this report included looking at expenditure by type of family. Ben Phillips noted that, “Single parents devote the biggest share of their expenditure to housing followed by lone occupants. Couples without dependants spend the lowest share. We also saw a clear correlation between housing costs and the ages of household heads.” The report shows that where the head is under 35 the share is 27.5 per cent compared with just 10.6 per cent for those aged 65 and over.
For more than 20 years NATSEM has been, and remains, one of Australia’s leading economic and social policy research centres, and is regarded as one of the world’s foremost centres of excellence for microsimulation, economic modelling and policy evaluation.
NATSEM undertakes independent and impartial research, and aims to be a key contributor to social and economic policy debate and analysis Australia-wide and throughout the world through expert economic modelling of the highest quality, and supplying consultancy services to commercial, government and not-for-profit clients. Through its research NATSEM is an active contributor to social and economic policy debate and its research receives extensive media and public attention. Most publications are freely available and can be downloaded from the NATSEM Publications website.
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- University of Canberra
Principal Research Fellow
The National Centre for Social and Economic Modelling
Tel: +61 2 6201 2760