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Australian household wealth reached a record high of $16.95 trillion in the December quarter of 2024, with property accounting for 67 per cent of this wealth.
The latest data from the Australian Bureau of Statistics (ABS) revealed that household wealth increased by $143.6 billion during the quarter, a rise of 6.5 per cent year on year and 0.9 per cent quarter on quarter.
This growth was driven by a record level of residential dwellings and land, totalling $10.60 trillion, up 5 per cent from the previous year. Cash investments also reached a record high of $183.85 billion.
Dr Mish Tan, ABS head of finance statistics, said while household wealth continues to rise, declines in house prices over two consecutive quarters have slowed growth.
“Annual growth in the value of residential land and dwellings over the 12 months to December 2024 was 4.4 per cent compared to 8.1 per cent in 2023,” Tan said.
However, property prices have staged a modest comeback according to the latest data released by Cotality (formerly known as CoreLogic), which revealed a rise of 0.3 per cent in its national Home Value Index, marking an apparent end to the prior three months of downturn.
This reliance on property exposes Australians to potential risks, particularly if property prices were to fall, according to Simon Arraj, founder of Vado Private.
“The data reveals households are holding high levels of cash despite falling interest rates,” Arraj said.
“Household cash and deposits investments struck $183.85 billion, jumping 8.3 per cent from a year earlier.
“Australians are devoting more of their money to an asset class that is yielding real returns close to zero.
“At the same time, more than two-thirds of household wealth is now locked up in bricks and mortar, a proportion which has increased in recent times as property values have risen, boosting demand for housing credit in 2024.
“Australians’ demand for property is growing, despite generally yielding a return of less than 5 per cent p.a.”
Arraj also said that the slowing growth in property prices poses a risk to the wealth gains many Australians have seen.
“With such a large proportion of household wealth tied up in property and cash, it makes sense for Australians to diversify their assets into higher yielding investments, which can deliver reliable income and protect against the share market falls we’ve seen this year and which could continue,” Arraj said.
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