Strong growth in quarterly household wealth

Total household wealth increased 4.3 per cent ($501.5b), the highest quarterly growth rate since the December quarter 2009, according to figures released today by the Australian Bureau of Statistics (ABS). Total household wealth and wealth per capita were at record levels of $12,033.5b and $467,709.

Head of Finance and Wealth at the ABS, Katherine Keenan said “The December quarter growth in household wealth was driven by rising residential property prices, reflecting record low interest rates, support through government programs such as the First Home Buyer and the HomeBuilder schemes, and pent up demand from buyers.”

Residential assets contributed 2.2 percentage points to the quarterly growth in household wealth, followed by superannuation balances and directly held shares, at 1.4 and 0.5 percentage points.

Through the year, household wealth grew 7.0 per cent, which was slightly below the long-term average of 7.3 per cent. Residential assets rose 7.7 per cent ($528.3b) through the year with property prices contributing 6.1 percentage points  to the growth.

“The growth in residential assets was seen across both owner-occupier and investor housing in the December quarter. Owner-occupier housing loans grew 1.9 per cent, which was the strongest growth seen in four years, while investor housing loans grew 0.4 per cent, which was the first positive growth recorded in the past two years.” Ms Keenan said.  

The housing debt to income ratio decreased from 139.2 to 139.0 over the quarter, as growth in income (1.2 per cent) was greater than housing debt (1.0 per cent). The ratio has fallen for the past four quarters, recording a 2.5 per cent  fall through the year which is the largest fall since 1990. The recent growth in income was driven by government income support packages implemented in response to the COVID-19 pandemic, including JobKeeper and the Coronavirus Supplement.

After drawing down on existing lines of credit in March quarter 2020, private non-financial businesses have reduced their loan balances for the third consecutive quarter, with total loan liabilities falling below pre-COVID levels.

Ms Keenan added: “Private non-financial businesses have turned to equity markets to access capital, issuing a net $70.9b in equities through the year. This resulted in the lowest debt to equity ratio (0.48) since the March quarter 2005”.

The ABS has published two articles for this release which examines housing and government and Reserve Bank financial balance sheets during the COVID-19 pandemic.