Aussie household wealth sees 1.5% increase in June quarter

According to the latest data from the Australian Bureau of Statistics, household wealth in Australia rose for the seventh consecutive quarter, increasing by 1.5% or $250 billion during the June quarter.

This brings total household wealth to an impressive $16.5 trillion, reflecting a significant year-on-year increase of 9.3% or $1.4 trillion.

The growth in household wealth was predominantly driven by the residential property market, with residential land and dwellings contributing 1.3% to the quarterly increase.

Mish Tan, ABS head of finance statistics, noted that "house prices have continued to rise across most states and territories, despite high interest rates. This trend largely reflects ongoing housing supply constraints and an uptick in investor activity over the quarter."

Superannuation assets also played a role in the overall growth, rising moderately by 0.3% or $13.7 billion during the same period.

The quarter also marked the maturation of the final allowance under the term funding facility, a measure implemented during the COVID-19 pandemic, which has since affected bank funding across financial markets.

Specifically, banks' exchange settlement accounts with the Reserve Bank of Australia saw a decline of $106.5 billion, a decrease of 32.3%, as $105.0 billion in securitized bonds were returned to bank balance sheets.

To maintain liquidity, banks purchased $23.1 billion in national general government bonds and $16.0 billion in semi-government bonds. 

Tan commented, "The TFF provided banks with access to low-cost funding during the pandemic. With the maturation of the TFF in June, banks are transitioning back to more traditional funding sources."

Total demand for credit reached $97.9 billion, primarily fueled by households, which accounted for $57.5 billion, and private non-financial businesses at $36.9 billion.

This was partially offset by a $2.2 billion decrease in credit demand from the general government.

The upward trend in household wealth highlights the resilience of the Australian economy amid fluctuating interest rates and evolving market conditions.