If you felt a bit poorer at the end of last year, you’re not alone — Australian households dropped a lazy quarter of a trillion dollars in wealth in the three months leading up to New Year’s Day.
According to Australian Bureau of Statistics data, household wealth fell $257.6 billion in the fourth quarter as the housing and equity markets tanked.
The 2.1 per cent fall in household wealth is the largest since 2011 and follows a 0.1 per cent decline in the previous quarter.
In real terms, taking into account inflation, the news was even glummer, with wealth down more than $310 billion — made of $170 billion in real holding losses on land and dwellings and $140 billion on financial assets.
While eye-watering in size, the losses were not surprising given housing market retreat was accelerating (the fourth quarter house price index dropped 2.4 per cent) and the ASX tumbled around 10 per cent over the quarter.
“Household wealth per capita decreased $10,198.10 to $404,319.80, following a $2,263.70 fall in household wealth in the previous quarter,” the ABS said.
“This is the first consecutive decrease in household wealth per capita since the December quarter 2011.”
Household debt hits new high
The worrying news out of the figures is, while household wealth is falling, the household-debt-to-income ratio hit a new record just shy of 200 per cent.
The figures show not only are households less wealthy, but household disposable incomes are falling too. This so-called “wealth effect” is in turn crunching consumer spending and the retail sector.
“Household gross disposable income fell 2.6 per cent to $312.7b from $321.2b in the previous quarter,” the ABS said.
“When other changes in real net wealth, commonly known as the wealth effect, is added to household gross disposable income, household gross disposable income adjusted for other changes in real net wealth fell from $182.1b to $15.8b,” the ABS calculated.