Property owners are seeing their wealth grow by what some economists describe as a “noteworthy” amount.

Australian Bureau of Statistics data show household wealth rose for a sixth straight quarter by 2.7 per cent ($431 billion), over the March quarter 2024.

Total household wealth was $16.2 trillion in the March quarter, which was 10.2 per cent ($1.5 trillion) higher than a year ago.

There are roughly 9 million “households” in Australia, and two-thirds of those either own their home outright, or are paying off a mortgage.

It means, on average, home owners’ wealth increased by $25,000 in the year to the March quarter.

“It’s noteworthy,” ANZ economist Madeline Dunk said.

“I suppose it’s kind of cool.

“Your wealth is growing because house prices have just been rising and rising and we expect they will continue to go up.”

The ABS reported “residential land and dwellings” were the largest contributor to quarterly growth in household wealth, adding 1.3 percentage points.

“Rising asset values continued to drive growth in household wealth in the first quarter of 2024, with house prices continuing to increase,” ABS head of finance statistics Mish Tan said.

Wealth effect

So, do people tangibly feel this wealth increase?

“It’s something the RBA have noted before that potentially that wealth effect is supporting household consumption,”  Ms Dunk said.

“You could argue that there is a little bit of a wealth effect going on.”

But, economists say, older Australians who own their home outright are spending more than other cohorts.

“Consumer confidence is higher for those people who own their home outright, compared to renters, and those paying off a mortgage,” Ms Dunk said.

“Of course we know the hit on real household disposable income has been greater for those people paying off a mortgage in particular.

“And if you look at some of the spending data too it does suggest that those people who are over 55 are generally tending to spend more and spend more on the fun stuff – they’re going on cruises, they’re still buying those indulgences that a lot of other people have cut back on.”

Independent economist Saul Eslake says the wealth gain from property is a symptom of Australia’s love affair with the housing market.

“Australia has become a property speculators’ paradise, especially since the halving of the capital gains tax rate back in 1999.”

“[It’s on] my list as one of the dumbest tax policy decisions of the past 25 years.”

Ms Eslake said it’s also hurting the monetary policy transmission mechanism.

Higher interest rates are meant to result in wealth either contracting or not rising as much.

“That isn’t happening,” Ms Eskale said.

“That channel of monetary policy isn’t working in the way the text books say it should.”

Households also held $1.46 trillion directly in equities (shares), $1.73 trillion in cash and deposits, and $3.88 trillion in superannuation.

Superannuation assets contributed 0.9 percentage points to [the 2.7 per cent] growth in household wealth this quarter, and that was driven by strong investment performance in both domestic and overseas markets.

Households’ direct ownership of shares and other equity contributed an additional 0.4 percentage points to the quarterly growth in household wealth.

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