A week after Credit Suisse crowned Australian households the world’s wealthiest on the back of our expensive housing, the Australian Bureau of Statistics (ABS) yesterday released household finance & wealth data for the June quarter.
The ABS revealed that total household wealth declined by $484,100 over the quarter, driven by a $280 million decline in the value of financial assets and a $156 million fall in the value of housing assets:
In per capita terms, household net wealth fell by $21,500 over the quarter, driven by a $12,100 decline in the value of financial assets and a $7,900 decline in the value of housing assets:
The situation will have deteriorated markedly since 30 June on the back of the RBA’s aggressive rate hikes. Since then, 5-city aggregate dwelling values have fallen 3.6%, which will have wiped out another $344 billion of Aussie household wealth based on the ABS’ figures:
If Morgan Stanley’s prediction of a 20% peak-to-trough decline in national dwelling values comes to fruition, then this alone would shave nearly $2 trillion from Australia’s household wealth.
Ultimately, how much wealth Australian households lose will depend on the aggressiveness of the RBA’s monetary tightening.
Whether it knocks Australia from top place on the wealth ladder will also depend on what happens overseas, given central banks across the globe are aggressively hiking rates and a global house price bust is on the cards.
