Household wealth up thanks to real estate and shares, but most Aussies aren't feeling it

Household wealth rose for the eighth quarter in a row, up 2.4 per cent or $401 billion in the September quarter of 2024, according to the latest figures released by the Australian Bureau of Statistics (ABS).

But rising interest rates are still seeing Australians holding onto their money, with the Federal Government’s recent economic update showing a slower than previously expected recovery in household and discretionary spending.

The ABS figures show that total household wealth was $16.9 trillion in the September quarter, 9.9 per cent ($1.5 trillion) higher than a year earlier.

Residential land and dwellings were the largest drivers of the rise, contributing 0.9 percentage points to the overall 2.4 per cent rise in household wealth.

The ABS’s head of finance statistics, Mish Tan, said several factors contributed to the growth.

“Household wealth continues to be supported by rising house prices despite recent moderation in growth,” Dr Tan said.

“Strong performances in domestic and overseas share markets contributed to the growth in household superannuation balances this quarter.”

Share market growth in the September quarter drove superannuation assets up 3.5 per cent ($137.4 billion), contributing 0.8 percentage points to the quarterly growth in household wealth.

The superannuation guarantee increased from 11.0 per cent to 11.5 per cent in the September quarter, which added to superannuation balances through increased employer contributions.

Household deposits rose 3.7 per cent ($61.5 billion) in the September quarter, reflecting a higher household saving ratio.

Gross disposable income grew, driven by an increase in household income and the introduction of stage 3 tax cuts. This outpaced household spending, resulting in notable growth in transferable deposit balances, particularly in mortgage offset accounts.

Total demand for credit was $113.3 billion, driven by private non-financial businesses ($44.7 billion), general government ($44.6 billion) and households ($19.2 billion).

“Commonwealth government issuance of Treasury bonds was the highest since September quarter 2020, driven largely by increased funding requirements,” Dr Tan said.

Increased public investment and policy measures, including the Energy Bill Relief Fund, to deliver cost-of-living relief to households, drove higher government spending in the September quarter.

Meanwhile, the introduction of stage 3 tax cuts reduced taxation receipts.

The release of the ABS data came one day after Federal Treasurer Jim Chalmers delivered the Mid-Year Economic and Fiscal Outlook (MYEFO), which details the Treasury’s forecast for lower growth over the next year than it had previously expected.

This is due to a slow upturn in household spending and the persistence of high interest rates.

MYEFO shows that while the federal budget is on track for a deficit of $26.9 billion this financial year ($1.3 billion lower than the May budget projected), it will not return to balance for another decade.

Australia is unlikely to see a surplus until 2034-35, despite the May Budget forecasting otherwise.

“We know that growth in our economy has slowed more than we expected at the budget due to a combination of higher interest rates, cost‑of‑living pressures and global economic uncertainty,” Dr Chalmers said.

“That’s why our economic plan is all about fighting inflation without ignoring the risks to growth.

“The Australian economy is on track for a soft landing, with the economy continuing to grow, a record for jobs created in a parliamentary term, participation near record highs, real wages and household incomes rising again, the gender pay gap narrower than ever before and business investment at decade highs.

“Our responsible approach has seen fiscal policy work alongside monetary policy to return inflation to the target band for the first time since 2021, and our fiscal settings continue to be consistent with sustainably returning inflation to target.

“At the same time, we’ve made important investments in our future growth and delivered cost‑of‑living help for Australians, including a tax cut for every taxpayer and help with energy bills for households and small businesses.

“The recovery in our economy is being supported by a return of real income per capita growth.”

Opposition Leader Peter Dutton, however, clearly sees it differently.

“The Reserve Bank Governor has pointed out very clearly to the Treasurer that if you continue the reckless spending, inflation’s going to stay higher for longer, which means interest rates stay higher for longer,” he said.

“Australian families who have had 12 interest rate increases under this government don’t see any relief in sight.

“Interest rates have already started to come down in Canada, in the United States, in New Zealand and in the UK.

“Now, they should have already come down here, but they haven’t because, as the Reserve Bank Governor points out, the government continues to spend.”