Falling property prices contribute to drop in household wealth

Household wealth has fallen for the first time in more than two years, with $484 billion being wiped off in the June quarter.

The 3.3 per cent decline saw total household wealth fall to $14.4 trillion, with wealth per capita dropping to $553,954, according to the latest Australian Bureau of Statistics (ABS) figures.

“This is the first quarterly fall in household wealth since the beginning of the pandemic, and coincides with increased cost of living pressures and rising interest rates,” ABS Head of Finance and Wealth Katherine Keenan said.

“Falling superannuation balances contributed 1.7 percentage points to the 3.3 per cent decline in household wealth.

“This reflected the large price falls in domestic and overseas share markets.”

Ms Keenan said residential property prices had also fallen and this contributed 1.1 percentage points to the fall in household wealth.

Despite the drop, household deposits grew 0.5 per cent, or $7.4 billion, during the quarter, with households accumulating $311.9 billion in currency and deposits since the start of the pandemic.

Source: ABS

Demand for credit also dropped from its record high last quarter but remained elevated at $13.9 billion.

This strength was driven by households ($53.1 billion), government ($44.9 billion) and other private non-financial corporations ($25.4 billion).

“Household demand for credit was the second highest on record, reflecting ongoing activity in the property market for both owner-occupier and investor loans,” Ms Keenan said.

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.