Household wealth increased for the third straight quarter in June, but household budgets continued to be under pressure, the latest ABS figures suggested.
In the June quarter, total household wealth was $15.1 trillion, up 2.6%, or $379 billion, from the previous quarter and was higher by 3.9% or $568bn, compared to a year ago.
Driving the increase in total household wealth was residential land and dwellings, which contributed 2.1 percentage points to the overall quarterly growth.
“Household wealth has grown alongside increasing house prices this year,” said Mish Tan (pictured above), ABS head of finance statistics. “Population growth has supported demand for housing while the supply of new and established dwellings to the market remained constrained.”
Also contributing to the June quarter’s household wealth growth was superannuation assets (0.3pp). Superannuation balances were backed by strong performance in overseas share markets, increased employer contributions in a strong labour market, and an anticipated seasonal lift in post-tax contributions.
Despite the boost in the household balance sheet, household budgets continued to show signs of being under strain in the June quarter.
For the first time since June quarter 2007, household deposit accounts shrank by $6bn, driven by an $18bn fall in transferable deposits and partly offset by a $12bn growth in non-transferable deposit accounts such as savings and fixed-term deposits. The biggest driver of the decline in household deposits was from unincorporated businesses.
“This was the first fall in deposit balances since the Global Financial Crisis and indicates that the household sector was tapping into cash reserves amid rising cost pressures,” Tan said. “This was consistent with a falling household saving ratio which is at its lowest level since June quarter 2008. Higher interest rates and income tax payable, paired with high consumer inflation, has reduced households’ savings buffers.”
Total demand for credit hit the lowest level since June quarter of 2005 at $38.1bn, driven by households ($37.7bn) and state and local general government ($10.2 bn). Demand for credit from private non-financial businesses was $851 million, while $15.7bn of the Commonwealth government’s debt had been repaid.
The Commonwealth government’s cash balance saw an improvement because of record receipts from income and corporate taxes, which cut its need to raise new debt. Also 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, ABS reported.
For more information, read Australian National Accounts: Finance and Wealth.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
