Household wealth rises 20pc

Record wealth

Household wealth rose 5.8 per cent or $735 billion in the June 2021 quarter to a record high of $13.4 trillion.

And that's a time when population growth has stagnated.

AS a result, the average net worth per capita has jumped by 20 per cent over the past year to $522,000. 

The average wealth per household is now around $1¼ million.

The stock market rebound and superannuation balances have played their part. 

And with the dwelling stock now valued at nearly $9 trillion, after accounting for nearly $2 trillion in mortgage debt, housing comprises more than half of Australian household net worth. 

Households own most of the rental stock in Australia, and as such the share of total housing credit going to the housing sector is now above 60 per cent, up from about 40 per cent a quarter of a century ago.

Since many small businesses also secure business loans using their home as collateral, the housing market is highly financialised, and as such the asset class has become too big to be allowed to fail.

The good news is that gearing ratios have moderated in sympathy with rising prices, and mortgage repayments have eased in the lower mortgage rate environment. 

Meanwhile CBA economists estimate that during lockdowns households have socked away some $230 billion in excess savings, leading to a massive war chest of cash and deposits. 

Six years ago American economist Scott Sumner predicted that the 21st century would be characterised by an unprecedented number of 'bubble' claims, due to a misunderstanding of the impact of low real interest rates on asset valuations. 

And that's certainly been the case in housing, with headline-grabbing bubble calls ranging from the U.S. to Canada, to Australia, New Zealand, Germany, the United Kingdom, and a range of other countries besides, none of which have burst.