The latest Household Income and Wealth data from the Australian Bureau of Statistics (ABS) has reported that in the 2017-18 financial year, 72.8 per cent of households were carrying debt, down from 73.6 per cent when the data was last recorded in the 2015-16 financial year.
However, the data also revealed that 28.4 per cent of Australian households were burdened with debt proportionate to at least three times their income, up from 27.2 per cent in the previous recorded period and up from 23.8 per cent a decade prior.
According to the ABS data, income growth has also slowed relative to previous periods, serving as further evidence of the slowdown in wages growth, which partly contributed to the Reserve Bank’s decision to lower the cash rate two months in a row.
ABS chief economist Bruce Hockman observed: “Over the past decade, income growth has been slow with average weekly household incomes increasing $44 to $1,062 in 2017-18. In comparison, in the four years up to 2007-08, average weekly household income grew by $220 in real terms to $1,018.”
He added: “For low-income households, there has been an increase of $28 in average weekly household income over the past decade, while for high-income households, there was an increase of $57.”
Despite an increase in the proportion of households with higher debt burdens and weaker income growth, average household wealth – total assets less total liabilities – has risen by 6.1 per cent since the last recorded period, and by 37 per cent over the past decade.
As at the close of the 2017-18 financial year, average household wealth totalled $1,022,200.
According to the ABS, the rise has been driven in part by increases in superannuation balances and “long-term growth in house prices”.