Believe it or not...Australia's household wealth has skyrocketed over the last two years despite enduring a once in a hundred-year pandemic and the first recession in three decades.
Household wealth rose 5.8 per cent or $735 billion in the June 2021 quarter to a record high of $13.4 trillion.
As a result, the average net worth per capita has jumped by 20 per cent over the past year to $522,000.
The average wealth per household is now around $1¼ million.
The rising tide did not lift all ships.
As with other elements of the pandemic, while we may all be in the same ocean, we are not in the same boat.
Older households have seen their wealth surge while many younger households missed out.
The reason for this is… rising house prices have driven a significant increase in wealth.
At the same time, the value of our other assets, in particular, superannuation balances and share portfolios has increased significantly.
Realestate.com.au's PropTrack attempted to estimate which age groups benefit the most from rising house prices.
Even though this (by their own admission) is a simplistic estimate based on limited data available, the message is very telling.
As you can see from the above graphic, much of the growth in wealth has occurred in older households who have seen their housing assets surge by $450 billion since the pandemic began.
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Remember...a third of Australians rent and so won’t have benefited from rising house prices – in fact, rising house prices mean this cohort now faces even greater barriers to entering the market.
Renters are typically younger than homeowners: two-thirds of households aged under 35 rent; just one-sixth of those aged over 55 do.
The following chart from PropTrack shows this year's age group employed; seasonally adjusted.
Younger workers did benefit from strong labour market conditions during the recovery earlier this year.
By mid-2021 a higher share of younger workers was employed than was the case pre-crisis. But with Sydney (and later Melbourne) returning to lockdown, job losses have again disproportionately fallen on these workers.
Moving forward as our economies open up and life becomes more "normal", it's likely that our housing market will keep growing due to increasing consumer confidence at a time of low interest-rate and continuing pent-up demand.
Moving forward nothing much will change - it's likely that the rich will keep getting richer because of the properties they own.
And APRA's measures to slow our property markets down are likely to affect lower-income earning households more than wealthier households.
There is no doubt that affordability is an increasing challenge for some segments of the market, but particularly first home buyers who have not had the benefit of homeownership as a source of wealth through equity generation.
However, all those who currently own property now had to start somewhere and there will never be a better time to get into the property market than now as the gap between the wealthy property owners and those who don't own property will only widen moving forward.