Household wealth hits new high as property surges

Household wealth – which comprises non-financial assets (such as land and dwellings), as well as financial assets (savings accounts, superannuation, shares etc) and liabilities (such as loans) – increased by 1.7 per cent, or $186.8 billion, in the September quarter, reaching a new record high of $11.4 trillion.

Increases in residential assets (1.2 per cent), deposits (5.4 per cent) and superannuation balances (1.1 per cent) were the main contributors to the growth in household wealth.

Average household wealth increased $6,850 (1.6 per cent) to $441,649 per person. 

Resi assets faring well

According to the ABS stats, financial assets of households rose $106.5 billion (1.9 per cent), driven by a $63.9-billion rise in household deposits and a $33.1-billion rise in superannuation reserves.

The bureau stated: “The increase in household deposit accounts was the largest on record. Growth was boosted by ongoing government income support packages and the second round of early access to superannuation, in addition to tax refunds which typically contribute to growth in September quarters. Household consumption only partly recovered from the fall in the June quarter as households continued to experience some reduced spending opportunities due to COVID-19-related restrictions, particularly in Victoria.”

Non-financial assets owned by households increased $85.4 billion (1.1 per cent), fully recovering the losses experienced in the June quarter. 

This was driven by an $86.8-billion rise in residential assets (land and dwellings), with holding gains of $73.6 billion on residential assets.

“Holding gains on land and dwellings reflected a rebound in property prices as housing market activity increased, with auctions and open home inspections resuming as social distancing measures eased across most of Australia,” the ABS found.

Indeed, household liabilities increased by $5.0 billion in the quarter (0.2 per cent), driven by a $12.5 billion rise in home loans. This was partly offset by a $4.4 billion reduction of short-term debt, such as credit cards and personal loans – as borrowers continued to pay down their debts and spend less.

“The increase in loan balances is consistent with the increase in new loan commitments, with easing social distancing measures boosting housing market activity and demand for new housing loans, particularly for owner-occupiers and first home buyers,” the ABS noted.

Overall demand for credit reached a record $154.9 billion in the September quarter, of which the vast majority was borrowed by government ($147 billion).

Commonwealth and state governments continued to raise significant amounts of funds to finance COVID-19 policies for the September quarter and beyond, the ABS noted, resulting in net borrowing increasing by $21.4 billion to $118.0 billion. This was the largest quarterly borrowing on record for general government, surpassing the $96.6 billion in the June quarter, and was financed mainly through the bond markets.

Households borrowed $7.7 billion.

Speaking after releasing the figures, the head of finance and wealth at the ABS, Amanda Seneviratne, commented: “The September quarter estimate surpassed the previous high of $11.2 [trillion] recorded in December quarter 2019, prior to the COVID-19 pandemic.

“The September quarter 2020 financial accounts reflected improvements in the Australian and global financial markets, as well as a partial recovery of the domestic economy in response to government and RBA policies, and easing social restrictions across most of Australia,” Ms Seneviratne said.

[Related: Home buying plans jump in November]