Household wealth takes a hit from property slump

March 23, 2023 12:08 PM AEDT | By AAPNEWS

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Household wealth takes a hit from property slump — Image source: AAPNEWS

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Sliding property prices are primarily responsible for shrinking household wealth that has been partially counterbalanced by healthier superannuation returns.

Australian Bureau of Statistics data shows total household wealth sank by another 0.4 per cent - about $57 billion - in the December quarter, marking a third consecutive quarter of decline.

Rising interest rates limited the amount buyers could borrow and weighed on demand, pushing down residential property values, the bureau said.

A 2.7 per cent ($260 billion) fall in residential land and dwellings over the three months contributed 1.8 percentage points to the overall decline in wealth.

Home value data released by CoreLogic in February showed capital city prices falling 9.7 per cent from their peak and 7.7 per cent across regional markets, although the easing rate of decline has sparked speculation the market is nearing the bottom of its slowdown.

A stronger quarter for superannuation kept a floor under the household wealth decline, with domestic and international share markets rallying after heavy losses in previous quarters.

Despite the 3.6 per cent ($120 billion) uptick in assets, superannuation balances have sunk by 6.7 per cent ($247 billion) since December 2021 due to weaker asset prices.

Deposits in fixed-term deposits also swelled, with banks offering higher interest rates, while demand for credit continued its decline in response to steeper borrowing costs.

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