Household wealth hits a new record high

Emma Duffy By on September 26, 2019
 
australia household wealth

Photo by mahdis mousavi on Unsplash

Australia’s household wealth has hit a new record high, smashing the previous highest ever recorded figure of $10,422 billion in September last year.

Household wealth surged 1.6% in the June quarter to a new record high of $10,455.3 billion, following a 0.2% rise in the previous quarter, according to figures released by the Australian Bureau of Statistics (ABS) today.

The highest ever figure for household wealth was recorded in September 2018 ($10,422.3 billion).

The increase was driven by gains on financial assets in the share market, mainly in superannuation assets. However, this was partly offset by losses on residential real estate.

Chief Economist for the ABS, Bruce Hockman said the resurgence of the share market continues to lift wealth.

“The share market continued to build on gains seen earlier in the year, boosting the value of household shares held directly and through their superannuation funds,” Mr Hockman said.

“Residential real estate has had six consecutive quarters of real holding losses but the losses this quarter were smaller than previous quarters.”

Household wealth per person increased to $411,492 over the June quarter – an increase of $6,926 from the last quarter.

More Australians investing in property

Despite the $26.5 billion in losses on residential real estate, the data shows an increase in households investing in property.

Households invested $38.8 billion, an increase of $2.2 billion from the previous quarter. This is normal for the June quarter, but the rise was smaller than usual which reflects the softness in the property market.

While residential real estate losses held back some growth in household wealth, the rate of decrease in the value of residential land and property slowed somewhat.

Household’s demand for credit was the weakest in six years and continues to be impacted by the slowing growth in loans for residential property, refecting the tight lending environment and the weak housing market.

Even though the data reflects a lift in residential property investment, the data also shows low growth in investor loans.

The majority of the increase in household loans from banks were for owner-occupiers.

The data shows mortgage debt is growing at a faster rate than the value of residential land and property. The mortgage debt to residential land and dwellings ratio increased from 28.7 to 29.0.

Job vacancies fall for first time in five years

The number of job vacancies has fallen over the year for the first time since February 2014, according to ABS data.

The number of job vacancies dropped by 1.9% (in seasonally adjusted terms) over the year.

Mr Hockman said that “following a period of sustained growth’ the trend level of vacancies has been declining for the last three quarters.

This points to further increases in the unemployment rate, which currently stands at a 12-month high of 5.3%.

SEEK managing director Kendra Banks said the number of job ads on the website has been declining 8.6% year on year.

“Low consumer spending is having a direct impact on business spending with many companies tightening their budgets, which can include a restriction or hiring freeze,” she said.

The new data further strengthens the case for the Reserve Bank to cut the official cash rate when board members meet next week.

The official cash rate is at a historic low of 1.00%, with all the signs pointing towards another rate cut in October.

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Emma Duffy
Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand.

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