Household wealth now falling: Commsec's Craig James

 

The Finance & Wealth publication from the Bureau of Statistics contains the most complete figures on household finances. And for the first time in two years wealth eased slightly. This hardly comes as a surprise – home prices eased in the quarter and the losses weren’t made up elsewhere, such as on the sharemarket.

 

On average, each Australian has net assets (assets less liabilities) of just over $410,000, a total that has lifted by over $9,000 in the past year. And over the past five years per capita wealth has lifted by more than $100,000 or 36 per cent. It is clear that household balance sheets remain solid.

 

 

Looking ahead home prices are likely to ease further from record levels. The $64 question is whether gains on the sharemarket will offset the reduced valuations of Australian homes. Per capita wealth may consolidate near $400,000 after tremendous gains over the past five years.

 

Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter. Wealth is still up $9,072.70 or 2.3 per cent over the year.

 

 

The ABS noted, “Household liabilities outgrew assets during March quarter 2018, resulting in a decrease of 0.4 per cent in household net worth, falling from a 2.0 per cent rise last quarter. Household liabilities was the largest contributor to the decrease in household net worth, detracting 0.3 percentage points, followed by land and dwellings assets detracting 0.2 percentage points.

 

Households held a record $1,105.7 billion in cash and deposits at the end of March. Cash and deposit holdings represented 21.65 per cent of financial assets, down from 21.71 per cent in the December quarter but still just above the post global financial crisis (GFC) average of 21.16 per cent and the long-term average of 16.3 per cent.

 

Households held a record $939.3 billion in shares or 18.6 per cent of all financial assets, in line with the average since the global financial crisis.

 

 

Pension fund (superannuation fund) assets fell by $9.9 billion to $2,174.5 billion in the March quarter. Cash and deposits stood at 11.3 per cent of financial assets, below the 13.5 per cent average since the global financial crisis, but above the long-term average of 9.4 per cent.

 

Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter. Foreigners held 30.5 per cent of total listed shares (long-term average 32.9 per cent).