Total household wealth increased 3.3 per cent in the December quarter 2019 to a record high of $11,309 billion, driven by real (inflation adjusted) holding gains on residential real estate, according to figures released today by the Australian Bureau of Statistics (ABS).
This is the strongest real holding gain on residential real estate since December 2009.
ABS Chief Economist, Bruce Hockman, said: "Residential real estate posted another quarter of strong real holding gains, reflecting a 3.9 per cent rise in residential property prices in the December quarter 2019." The value of household financial assets including shares and holdings in superannuation funds had a modest increase of 1.5 per cent, reflecting the smaller holding gains on financial assets. While holdings in superannuation funds are at a high of 55.7 per cent of total household financial assets, the share of deposits remains at a nine year low of 19.4 per cent. The long term decline in deposits as a proportion of financial assets is in line with record low interest rates, which recorded a total cash rate cut of 75 basis points from June through to December quarter 2019.
Average household wealth increased by $12,809 to $442,705 per person this quarter, which is the highest on record. Household wealth grew 10.2 per cent through the year, with household wealth per person increasing 8.6 per cent through the year compared to population growth of 1.5 per cent.
"Despite the long term decline in household deposit assets as a proportion of financial assets, deposits still remain the largest funding source for Authorised deposit-taking institutions (ADIs), increasing to 58.3 per cent of their funding," Mr Hockman said. At the same time, funding from shares and bonds fell due to significant losses experienced by ADI shares on the Australian Stock Exchange and a large number of ADI bond maturities, resulting in a 14 year low of funding through bonds.
There was no notable impact on the December quarter 2019 Finance and Wealth statistics resulting from the recent bushfires.