Household wealth hits a staggering $16.5tn

Household wealth in Australia has increased for the seventh consecutive quarter, rising by 1.5 per cent in the June quarter to a record $16.5 trillion, driven primarily by property assets, according to the Australian Bureau of Statistics (ABS).

Total household wealth now sits 9.3 per cent higher than a year ago, driven by residential land and dwellings that contributed 1.3 percentage points to quarterly growth.

Dr Mish Tan, head of finance statistics at the ABS, said: “House prices have continued to rise across most states and territories, despite high interest rates.

“This largely reflects ongoing housing supply constraints and an uptick in investor activity over the quarter.”

These assets now account for approximately two-thirds of total household wealth, underscoring the importance for Australians to diversify their investments beyond property, according to Tim Keith, managing director of Capspace.

Property assets reached an unprecedented level of $11.22 trillion as of 30 June 2024, making up around 68 per cent of household wealth. The surge in household wealth over recent years has largely been attributed to rising property prices.

Households also hold $1.72 trillion in cash and deposits or 10.4 per cent of their total net worth, alongside a record $3.94 trillion in superannuation assets.

“With almost 80 per cent of Australians’ household wealth tied up in low-yielding residential property and cash savings, it makes sense for investors to diversify into other asset classes to lessen the risk of their wealth falling should capital city residential property prices drop due to any rise in unemployment or slowing economic growth,” Keith said.

He said that while property owners have seen significant benefits from rising property prices in recent years, there is now evidence of weakening house prices in Sydney and Melbourne, with auction clearance rates falling below levels from a year ago.

Keith also said that returns on cash are declining. Both large and small banks have reduced term deposit rates following a global decline in market interest rates.

Official data from the Reserve Bank of Australia (RBA) showed that the average interest rate on one-year term deposits fell to 4.3 per cent in August from 4.5 per cent in July, while the average advertised rate on three-year term deposits dropped to 3.8 per cent from 3.95 per cent.

“It now makes sense for Australians, including retirees seeking income, to diversify their investments,” Keith said.

“In particular, defensive fixed income assets such as private credit can deliver Australians attractive income yields at around 10 per cent per annum, compared to residential property, which typically yields less than 5 per cent.”

[RELATED: Record high of million-dollar suburbs in Australia]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.