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By Brett Warren

Household wealth fell for the second consecutive quarter

Australia's household wealth fell for the second consecutive quarter this year.

Yes, according to the latest data from the Australian Bureau of Statistics (ABS), household wealth decreased by 1.9 per cent ($276 billion) in the September quarter of 2022.

Household Wealth

Total household wealth is now $14.2 trillion, after the previous fall of 3.3 per cent ($494 billion) in the June quarter this year.

However, household wealth grew by 0.7 per cent throughout the year despite these two consecutive quarterly falls.

The fall was entirely driven by the decrease in the value of residential land and dwellings

Katherine Keenan, ABS head of finance and wealth statistics, said:

“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.”

She explained further:

"The softer fall in household wealth in the September quarter was due in part to an increase in household deposits (up 3.5 per cent to $50.8 billion), driven by a rise in term deposits.

The record increase in the household take-up of term deposits coincided with increasing interest rates, and income tax returns.

The contribution of superannuation to the fall in wealth was relatively flat at -0.1 percentage points (compared to the -2.0 percentage point contribution in the June quarter).

The superannuation guarantee was increased in the September quarter from 10 per cent to 10.5 per cent.

This resulted in increased employer contributions and helped offset impacts from domestic and international stock markets."

The state of Australia's demand for credit

According to the latest figures, the total demand for credit was $118 billion, led by private non-financial corporations ($69.0b) and households ($26.3b).

Private non-financial corporations’ demand for credit was driven by merger and acquisition activity with the Reserve Bank also noting the need to fund regular operations amidst supply chain issues.

Meanwhile, private non-financial corporations’ demand for loans was the strongest since the onset of the COVID-19 pandemic in March 2020, with strong growth in bank loans from large businesses.

On the other hand, household demand for credit slowed this quarter (down 50.4 per cent), reflecting a weakening appetite for housing credit due to interest rate rises and inflationary pressures.

The national government's decrease in demand for credit was due to $24.8b of bond repayments in July 2022.

Social assistance benefits have softened since the height of the pandemic, which has reduced funding requirements.

About Brett Warren Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.
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