Australia's financial stress index.
Australians have tripled their savings account balances in the last three years but consumer financial stress is still very high, according to the findings in the Dun & Bradstreet Consumer Financial stress index
Consumer financial stress has eased during the first quarter of the year from the 24.9 seen around Christmas to 21.2 in March but overall levels are still high compared to low levels around -10 seen back in 2010.
Consumer financial stress levels began to stabilise in 2012 and despite a rise in the later half of the year, thanks to low interest rates levels and solid wages, it is expected that with a continuation of share market and house price increases, the level of consumer financial stress will further improve.
"During the latter part of last year and into 2013 we saw consumers demonstrating financial conservatism as they paid down their debts, reduced their use of credit and boosted savings. This appears to have strengthened the financial position of many consumers, with reduced financial stress at the beginning of this year matching improvements in most consumer confidence measures." said Dun & Bradstreet's CEO, Gareth Jones.
However results were not equal state by state. Levels of financial stress were at their lowest in Western Australia, thanks to high wage growth and low unemployment but these levels are deteriorating and the mining boom begins to slow.
Consumers in New South Wales and Victoria had the highest sustained levels of financial stress with house prices and levels of debt being the significant factor contributing to stress. Conditions have slightly improved in New South Wales thanks to a solid job market. Victoria saw index increased in March to 33.4 around the same time the state shed 9,300 jobs.
"There are risks ahead for consumers, however, in the slight rise in the unemployment rate, signs that the house prices pick-up might be cooling and recent volatility in share prices, which could see financial stress levels remain elevated," according to Stephen Koukoulas, economic advisor to Dun & Bradstreet.
Many Australians could be unknowingly contributing to their levels of financial stress by paying more than they need to on their banking products. Check Mozo to find better home loans, savings accounts and more.
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