Sydney, Sept 28: Australian household wealth experienced a steady increase for the third consecutive quarter, growing by 2.6 percent ($379 billion) during the June quarter of 2023, as reported by the Australian Bureau of Statistics (ABS) today.
The total household wealth reached $15.1 trillion during the June quarter, marking a 3.9 percent ($568 billion) rise compared to the previous year. This boost in wealth was primarily driven by gains in residential land and dwellings, contributing 2.1 percentage points to the overall quarterly growth.
Dr. Mish Tan, ABS head of finance statistics, noted, “Household wealth has grown in tandem with rising house prices this year. Population growth has maintained housing demand, while the supply of both new and existing dwellings in the market remained limited.”
Superannuation assets also played a role in the growth of household wealth, contributing 0.3 percentage points to the June quarter’s increase. Factors supporting superannuation balances included strong performance in overseas share markets, increased employer contributions in a robust labor market, and an anticipated seasonal rise in post-tax contributions.
Despite the improvement in household wealth, signs emerged during the June quarter indicating that household budgets were under pressure. Household deposit accounts decreased by $6.0 billion, marking the first quarterly decline since the June quarter of 2007. This decline was primarily driven by an $18.0 billion decrease in transferable deposits, partially offset by a $12.0 billion increase in non-transferable deposit accounts such as savings and fixed-term deposits. Unincorporated businesses were the primary contributor to the reduction in household deposits.
Dr. Tan explained, “This decline in deposit balances, the first since the Global Financial Crisis, suggests that households were drawing upon their cash reserves in response to rising cost pressures.”
“This trend aligns with a decreasing household saving ratio, which reached its lowest level since the June quarter of 2008. Higher interest rates, increased income tax obligations, and elevated consumer inflation have eroded households’ savings cushions.”
In addition, total demand for credit, amounting to $38.1 billion, was at its weakest since the June quarter of 2005. This decline was largely attributed to households ($37.7 billion) and state and local general government ($10.2 billion). Private non-financial businesses’ demand for credit was $851 million, while the Commonwealth government repaid $15.7 billion of its debt.
The Commonwealth government’s cash balance improved due to record income and corporate tax receipts, reducing the need for new debt issuance. During the quarter, $11.8 billion of Treasury bonds and $4.1 billion of short-term debt securities matured, allowing the Commonwealth government to repay creditors.
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