Off the back of a property market slowdown, wealth per capita fell 2.2% or $12,050 to $545,532 in the September 2022 quarter according to ABS data released Thursday.
Total household wealth fell for the second consecutive quarter, decreasing by 1.9% to just over $14.2 trillion
This was driven by weakness in the housing market - national housing values declined by 3.2% over the year to November.
However, the ABS reports household wealth grew by 0.7% through the year despite the two quarterly falls.
Head of Finance and Wealth at the ABS Katherine Keenan said residential property prices drove household wealth south.
“This fall in household wealth was almost entirely driven by the decrease in the value of residential land and dwellings, which recorded its largest decline since December 2008,” Ms Keenan said.
The ABS noted the softer fall in household wealth in the September quarter was due in part to an increase in household deposits, up 3.5% to $50.8 billion.
Households favoured placing excess funds in deposit accounts to take advantage of rising interest rates, particularly in term deposits.
“The record increase in household take up of term deposits coincided with increasing interest rates, and income tax returns,” Ms Keenan said.
Despite this, households have had to dip into their savings to keep up with cost of living pressures.
The household savings ratio declined to 6.9% in the September 2022 quarter, according to the ABS.
Household demand for credit softens
The ABS reports demand for credit slowed this quarter (down 50.4%).
A weakening appetite for housing credit is due to interest rate rises and inflationary pressures.
Households repaid $1.5b in short term loans as consumer spending fell amid Covid restrictions. This resulted in $28.0b of long term loan borrowings, partly offset by the $1.5b repayment of short term loans.
Image by Dan Freeman via Unsplash
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