The Australian Bureau of Statistics (ABS) yesterday released household wealth data for the September quarter of 2021, which revealed that total household wealth increased by 4.4% ($590.0 billion) over the September quarter 2021 reaching a record $13,918.5 billion:
Total dwelling assets surged by 5.5% ($465 billion) over the quarter to a record high $8.85 trillion, whereas total financial assets rose 2.5% to a record high $6.61 trillion.
Per capita household wealth also surged by 4.3% over the quarter to a record high $540,200, with per capita dwelling assets rising 5.4% to $343,500 and per capita financial assets rising 2.4% to $256,500:
My view is that having so much wealth locked up in housing is useless. We all need somewhere to live and higher home values serve little purpose to the vast majority of owner-occupiers, who typically must sell and buy into the same market.
Expensive housing also punishes those who have recently entered, or are yet to enter, the housing market. These people are required to either take-out mega-mortgages and have a life of debt slavery, or miss-out altogether.
Would Australians really be worse-off if the median dwelling price was $350,000 instead of $700,000, mortgage debt was 70% of disposable incomes instead of 140%, and the banking sector was smaller and less profitable?
The answer is obviously no. Lower debt loads would make Australian households better-off, whereas the broader economy would benefit from the productivity-boosting effects of lower land prices, increased business lending (investment), and a more balanced economy.