Australian personal wealth smashed by crashing house prices

From Roy Morgan Research:

In the December quarter 2018, the gross personal wealth (assets) of Australians including owner occupied homes, stood at $9,784 billion. This represents a drop of $512 billion or 5.0% from the September quarter when it was $10,296 billion and is now at the lowest level recorded throughout 2018. Net wealth (after debt) has also decreased by 4.3% from $8,993 billion to $8,608 billion.

These are some of the latest findings from Roy Morgan’s ‘Single Source Survey’, which is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes. This large sample of consumers collected over more than two decades enables an accurate understanding of long term wealth trends, rather than being distracted by short term events and movements. The latest data in this release covers the three months to December 2018.

Average gross household wealth remains over $1 million

Despite the overall decline in household wealth of $512 billion over the December quarter, the average gross household wealth remains over one million dollars with $1,016,000. This is $58,000 or 5.4% below the average recorded in the September quarter and the lowest since December 2017.

The average gross wealth per capita was $502,000 in September and this has also fallen by 5.4% to $475,000 in December, the lowest for 12 months.

Owner occupied homes lose $270 billion in the December quarter

The decline in value of owner occupied homes of 5.2% or $270 billion, accounted for over half (52.7%) of the decline in gross personal wealth for the quarter. Other major losses were seen with superannuation and pensions/annuities down $93 billion (3.5%), property investments down $54 billion (5.4%) and other down $95 billion (6.7%). Included in others were managed funds, other direct investments and deposit/transaction accounts. The only investment category to show a gain over the year was deposit and transaction accounts which were up 5.4%.

Key component of personal wealth still the home

Owner occupied homes remain the mainstay of personal wealth as they still account for half (50.1%) of gross personal wealth in Australia, despite a major drop in total value over the last quarter. Superannuation accounts for nearly a quarter (24.4%) of total wealth, followed by property investments (9.9%) and deposit and transaction accounts (7.5%).

Increases in their share of wealth in the December quarter were seen from deposits and transaction accounts (up 0.7% points), superannuation (up 0.3% points) and pensions and annuities (up 0.1% points). Losses in wealth share were other direct investments (down 0.7% points), managed funds (down 0.3% points) and owner occupied homes (down 0.1% points). Property investments remained unchanged at 9.9%.

 

Comments

  1. Surely, just a cyclical negative sideways movement, right?

    Nothing to worry about, folks. Be confident and jump into the sea of debt!!

  2. TailorTrashMEMBER

    When “wealth “ is magically formed and secreted in the cracks in the mortar between the bricks of your home it’s not surprising that it might disappear one night .

    • Oh, lah-dee-dah! Mr TT here has a bricks and mortar house! I presume you also have a concrete slab, no? 😂🤣😂 Luxury! Most of us live in holes in the ground, in the middle of the road!

  3. It’ll be game-on when our Super-funds realize just how exposed they are to RE. The investments they’ve made for us will all turn out to be nothing more than a small part of the bigger Ponzi
    So what does the Wealth look like if Super, Property Investing and Owner Occupied RE all catch the same virulent dose of the flu.

    • Jumping jack flash

      “So what does the Wealth look like if Super, Property Investing and Owner Occupied RE all catch the same virulent dose of the flu.”

      They’re all sitting on the same bubble of nonproductive debt so they’ll all go down together. The debt looked like it was productive because it was growing and everything sitting on top of it was growing, but it was just a bubble sitting on top of a house of cards.

      anyone know what “Australian Fixed Interest” is and whether it has any direct reliance on house prices?

    • You can include a high percentage of the value of bank shares as being based on maintaining RE prices. Think what happened to the US bank shares during the GFC due to problems in the real estate sector as an example.

      We are a three trick economy – RE, holes, and asset sales to overseas interests. It is just a matter of time (could be another 10 years for all I know) and the whole thing will come smashing down. Household net wealth could become minimal on average because the debt will not disappear – bad debt will be bought up at a fraction in the $ and households will still owe these loans.

      My preference at present is cash and gold mining shares. I may move my cash into govt bonds as a safety play against a possible bank bail in when the sign are propitious. I suppose holding overseas assets is another way to protect wealth, but this also has to managed carefully as nothing is 100% safe.

  4. Jumping jack flash

    $10,296 billion!

    Far out, that must’ve taken a lot of debt to get it that high, and to keep it that high.
    Better hope that debt is productive debt otherwise we’re going to have a doozy of a time trying to repay that interest on that debt wad! That’s a serious economy-crushing load of debt right there. Probably it isn’t all debt, but a great portion of it will be.

    For wealth to be lost, the wealth first had to be there. What was there wasn’t wealth, it was never wealth, it was debt. Either their own debt, or someone else’s debt. At the end of the day it doesn’t matter who’s debt it is, it is all fake debt money. Not real money.

    Debt is and always will be the opposite of wealth. Unless of course you’re a bank. Only banks are banks. People are people, and people are not banks.

    But a very easy test to see whether it is wealth or debt is to work out how to spend all that wealth that is supposedly owned.
    If it is required to go to the bank and ask for debt to be able to spend it, then it’s not wealth, its actually debt.
    Even if the asset is sold and someone hands over a stack of money for it, then if they had to ask the bank for that money to hand over, it isn’t real money. Its debt.

      • Nah I’ll be right thanks Eddie, I’ll just get back to me smashed avo if you don’t mind?

      • Mining BoganMEMBER

        Pfft…smashed avo. Get with the times. It’s Uber eats now that’s stopping young’uns entering the housing market. Apparently the kids are all too lazy to walk 200 metres to the shop.

      • TailorTrashMEMBER

        Tonight I’ll be eating debt infused fillet streak with financially stressed garlic butter green beans and a side serve of foreign owned potatoes …….

    • Gross personal wealth, and I don’t imagine the liabilities side of the balance sheet has contracted at the same pace.