Q2 2015 Insolvencies Increase by 1.5%
Total insolvency activity increased in the December quarter by 1.5%, with growth in debt agreements strong at 4.4%. Bankruptcy numbers remain steady and personal insolvency agreements, matters for those with very large amounts of debt/income, declined by 24.1%. Increasing levels of debt agreements vs. bankruptcy is an indicator of financial pressure on families and individuals.
While economic conditions have improved; the unemployment rate has dropped slightly, job growth remains positive and interest rates are low. Wage growth is at its lowest point since 2000 and while inflation remains well under control, Australians continued to be squeezed by high accommodation costs.
Australia has the second highest population growth rate in the OECD after Luxembourg. This coupled with the existing housing shortage will continue to put upward pressure on accommodation costs and contribute to financial pressure experienced by Australians. Should interest rates, or unemployment rates increase this will lead to insolvency levels increase back to record levels. Long term actions to increase housing supply or decrease population growth, will lower accommodation costs and decrease financial pressure.