-1280x720-800x450.jpg)
Household wealth in Australia has fallen for the third consecutive quarter, decreasing by 0.4 per cent in the December quarter of 2022, according to new data from the Australian Bureau of Statistics (ABS).
The ABS released its data on Thursday, confirming the drop of $57 billion in household wealth across the country over the quarter.
Today, household wealth in Australia sits at $14.4 trillion — three per cent lower than a year ago.
ABS Head of Finance and Wealth Statistics Mish Tan attributed the drop to “falling property prices in the housing market, as rising interest rates lower demand and household borrowing capacity”.
The value of residential land and dwellings fell by 2.7 per cent, or $260 billion, in the December quarter. It contributed 1.8 percentage points towards the overall drop in household wealth.
Compared to December 2021, the total value of residential land and dwellings is now $9.2 trillion, 3.9 per cent ($374 billion) lower.
Offering some upside was the rise of superannuation assets following heavy losses in the previous quarters.
They rose 3.6 per cent ($120 billion) during the December quarter, but superannuation balances have lost 6.7 per cent ($247 billion) in value since December 2021 as asset prices declined.
House deposit figures went up 32.3 billion to a record $623.3 billion now invested in various non-transferable deposit accounts.
“Households have increased their investments in term deposits as banks offer higher interest rates on these products,” Dr Tan said.
As a result of the continued rate rises, credit demand fell as figures totalled $63.8 billion for the quarter, continuing its decline from record-high levels in the March quarter of 2022.
The ABS said it was driven by households ($31.5 billion), private non-financial corporations ($16.0 billion) and the government ($11.2 billion).
“Total credit growth slowed during the quarter amid an environment where households and businesses are facing higher borrowing costs,” Dr Tan said.
Dr Tan added that government borrowing eased following the pandemic recovery.
Further, with rising cost-of-living pressures, people have been forced to cut down on frivolous spending.
According to a Finder cost-of-living report, households were paying 7.8 per cent more for goods and services in December 2022 compared to the same period in 2021.
In the report, 429,000 households were recorded to have missed a mortgage repayment in the second half of 2022.
With that being said, according to the ABS’ experimental indicator of household spending using bank transactions data, for the month of January 2023, household spending increased 17.8 per cent through the year on a current price, calendar-adjusted basis.
Diving further into it, household spending increased for services, up 28.2 per cent, and goods, up 8.6 per cent.
It’s difficult to say whether or not the household wealth figures will continue to fall: that will depend on if potential future rate hikes continue and if property prices continue their downward slope.