Despite worries of a housing downturn, Australians’ wealth actually increased 1.2 per cent on average in the first quarter of 2022 off the back of the housing market.
The Australian Bureau of Statistics (ABS) has reported that the total household wealth held by Australian residents increased by a total of $173 billion in the March quarter, reaching a record $14.9 trillion. Wealth per capita similarly hit a high of $574,807.
According to Katherine Keenan, head of finance and wealth at ABS, continued property price growth was responsible for the significant growth of Australians’ bottom lines.
“While the pace of property price growth started to moderate, with falls in Sydney and Melbourne this quarter, other capital cities and regional areas rose, resulting in an overall rise in house prices of 1.9 per cent nationally,” she explained.
Currency and deposits contributed 0.2 percentage points to growth in the March quarter, while superannuation balances and household loans both detracted 0.3 percentage points from the rate of growth.
For Australians, this latest quarterly increase reflects a continuation of a trend they’ve been experiencing since roughly the start of the pandemic.
In the two years since the March quarter of 2020, household wealth has increased 35.3 per cent, adding $146,008 to the average wealth per capita, the ABS revealed. All told, households accumulated $305 billion in currency and deposits since the start of the pandemic.
The appreciation of residential property assets accounted for most of the growth in household wealth since the onset of COVID-19, rising 39.9 per cent over the two-year period.
Superannuation balances increased 22.5 per cent since March 2020, as share markets were supported by accommodative monetary policy, but have since begun to drop back. Superannuation balances declined 1.3 per cent this quarter as the shaky performance of global share markets impacted the value of overseas assets held in super funds.
The Reserve Bank of Australia (RBA) also noted that while house prices had begun to slide in some markets around Australia, they remained more than 25 per cent higher than pre-COVID levels, supporting elevated household wealth and spending.
It was a substantial factor in the central bank’s decision to raise the cash rate by 50 basis points during its last board meeting and will continue to play a part as the board considers future rate rises in the months ahead, according to the RBA’s governor Philip Lowe.
ABOUT THE AUTHOR
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.