Financial assets lift household wealth

John Kavanagh Consumer lending

Increases in the value of financial assets in the June quarter more than offset falls in residential property values and were the main contributor to an increase in household wealth.

According to the latest Australian Bureau of Statistics finance and wealth data, total household wealth increased 1.6 per cent in the quarter, reaching a record high of A$10.4 trillion.

Wealth increased by $4966 per person to $411,492. This is below the record of $416,389 per person recorded in the June quarter 2018.

The value of land and dwellings owned by households fell $26.5 billion to $6.7 trillion during the quarter. It was the sixth consecutive quarter when the value of residential land and dwellings owned by households fell.

The value of financial assets, mainly superannuation assets, rose by $169.1 billion to $5.6 trillion. The gain during the quarter was a record.

Household liabilities rose by $8.1 billion to $2.5 trillion. This was the biggest increase in two years.

The ABS said this increase was driven mainly by long-term loan transactions. There was also an increase in the value of Higher Education Loan Program loans, with the valuation increases representing changes in actuarial assumptions due to fall in the discount rate.

There was a 0.8 per cent fall in short-term loans.

The household debt to asset ratio remained steady at 19.3 times. Mortgage to residential land and dwellings ratio increased from 28.7 to 29 times, indicating that mortgage debt grew faster than the value of residential land and dwellings.

Household net savings fell from $10.7 billion to -$9.2 billion (a $19.9 billion fall), driven by a fall in gross disposable income and an increase in consumption expenditure.