The fall in property prices due rising interest rates, inflation, and other economic uncertainties has resulted in Australian household wealth falling over the September quarter.
Figures from the Australian Bureau of Statistics (ABS) showed a 1.9% decline in household wealth in the quarter, equivalent to a fall of $276bn.
Australians’ total household wealth now sits at $14.2tn.
ABS head of finance and wealth Katherine Keenan said despite the two quarterly falls, the total household wealth figure was still 0.7% higher than last year.
“This fall in household wealth was almost entirely driven by the decrease in the value of residential land and dwellings, which recorded its largest decline since December 2008,” she said.
The softer decline in household wealth in September was due to the increase in household deposits, which were up 3.5% to $50.8bn. This was driven by the surge in term deposits.
“The record increase in household take up of term deposits coincided with increasing interest rates, and income tax returns,” Ms Keenan said.
Demand for housing loans still down
ABS showed that after the September 2022 quarter, the value of total new loan commitments for housing declined 2.7% in the following month.
The value of new owner-occupier loan commitments fell 2.9% in October, while the value of new investor loan activity went 2.2% down.
Ms Keenan said that despite the decline in fresh financing from both segments, it appears borrowers are using the current rate environment to refinance.
In fact, the monthly owner-occupier refinancing between lenders has remained above $12bn since June, which was higher than pre-pandemic values. Investor refinancing also remained elevated.
“The RBA cash rate increased 225 basis points between June and October 2022, which coincided with a greater number of borrowers seeking loans with lower interest rates from competing lenders,” Ms Keenan said.
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