Australian Household Wealth Sees Continued Growth in June Quarter

The Australian Bureau of Statistics (ABS) released data today indicating that household wealth in Australia has seen a consistent increase, rising by 2.6 percent (equivalent to $379 billion) in the June quarter of 2023. This marks the third consecutive quarter of growth.

As of June 2023, total household wealth reached $15.1 trillion, reflecting a notable 3.9 percent ($568 billion) surge compared to the same period last year. The primary driver behind this increase was the growth in residential land and dwellings, contributing 2.1 percentage points to the overall quarterly expansion.

Dr. Mish Tan, Head of Finance Statistics at ABS, explained that the rise in household wealth aligns with the ongoing increase in house prices observed throughout the year. Population growth, coupled with constrained supply in the housing market, sustained robust demand for housing.

Superannuation assets also played a role in the overall growth, contributing 0.3 percentage points to the June quarter’s household wealth increase. This was supported by strong performance in overseas share markets, increased employer contributions in a thriving labor market, and an anticipated seasonal growth in post-tax contributions.

However, despite the positive trajectory of household wealth, there were signs of strain on household budgets in the June quarter. Household deposit accounts experienced a decline of $6.0 billion, marking the first quarterly contraction since June quarter 2007. This decline was primarily driven by a decrease of $18.0 billion in transferable deposits, partially offset by a $12.0 billion increase in non-transferable deposit accounts such as savings and fixed-term deposits.

Dr. Tan highlighted, “This decline in deposit balances indicates households tapping into cash reserves amid rising cost pressures, reflecting a falling household saving ratio, now at its lowest level since June quarter 2008.”

Total demand for credit, at $38.1 billion, was the weakest since June quarter 2005, primarily driven by households ($37.7 billion) and state and local general government ($10.2 billion). Private non-financial businesses’ demand for credit stood at $851 million, while the Commonwealth government repaid $15.7 billion of its debt.

The Commonwealth government’s improved cash balance was attributed to record receipts from income and corporate taxes, reducing the need for new debt. During the quarter, $11.8 billion of Treasury bonds and $4.1 billion of short-term debt securities matured as the Commonwealth government repaid creditors.