Andrew Bell’s Market Wrap: Record Household Wealth

Issue 21 | Thursday 21 October 2021 | Record Household Wealth

Hi, Andrew Bell here with you, wow what a weekend was had here on the Gold Coast last week with the Mayoress Ball and we also had our famous Main Beach Next Top Dogel Finals, now in its second year, a great community event. Now of course we get a sense that our borders are very close to opening with lockdowns beginning to ease across the country, we are hopeful that everyone will be able to spend the holiday season with their friends and family right across Australia.

I have some interesting figures just released from the Australian Bureau of Statistics which has shown that total household wealth rose by 5.8 per cent or $735 billion over the quarter, taking total household wealth to a record high of $13.4 trillion. It is no surprise that primarily rising property prices have been a significant reason for that as residential property assets grew by 4.5 per cent in the quarter alone.

Superannuation was next at 1.1 per cent, followed by shares at 0.3 per cent. This figure translates to $522,032 of wealth per person. Doesn’t sound like a lot but it is an average and allows for every man, woman and child.

The Australian Bureau of Statistics Head of Finance and Wealth, Katherine Keenan explained that residential property prices have recorded their strongest quarterly growth on record at 6.7 per cent, and that the demand for credit came to $78.6 billion which was a rise of $25.5 billion over the quarter and taking total household borrowing to $45.1 billion. Household demand for credit was the strongest it has ever been since the June quarter of 2007, with most borrowers chasing new housing loans during this booming real estate market.

There was a $38 billion rise in housing loans and an $8.7 billion increase in unincorporated business loans which drove an overall 1.8 per cent or $8.7 billion growth in household liabilities. The bulk of the borrowings for real estate were from owner-occupiers who took up $31.9 billion of the borrowings whilst investors only accounted for $6 billion. The growth in owner-occupier loan balances was the strongest in 5 years and pleasingly deposit accounts with banks grew by $45.1 billion – a 1.7 per cent increase. It is nice to know there is some $2.7 billion in savings with the banks.

However, at the same time, the Reserve Bank is increasing its conversation and its warnings about rising debt levels within Australia, which is a result of rising arrears of loan repayments and rising defaults on mortgages. It is no wonder APRA has just increased the safety net for borrowers; meaning that from 1 November there will be a requirement for borrowers to qualify on the basis of them being able to meet repayments on their loans should interest rates be at a higher level, as they forecast they will be in the foreseeable future. We will talk more about that in my next report.

Meanwhile, our real estate market here on the Gold Coast keeps going from strength to strength. Following our in-room auctions just 2 weeks ago, we had another four on-site auctions which saw one property in Wishart, Brisbane with 27 registered bidders and a reserve price of $1.23 million sell for $1.36 million, a property in Mabel Avenue, Southport with 16 bidders and a reserve price of $550k sell for an incredible $860k, a property at Aberdeen Avenue, Benowa sell prior to auction at $2.2 million, and a property at 33 Muir Street, Labrador that went to auction and sold for $1.05m

All of this is happening as we run into the final weeks of the year in which there is generally a strong surge as people try to secure their real estate purchases before the Christmas/New Year break. Hold onto your hats.

It was great to have had some rain here on the Gold Coast over the last week. We were getting very dry and needed to top up our dams, so with some anticipation that our borders will be opening in the not too distant future, we are all set and ready to welcome so many of our fellows Australians back into Queensland.

I’ll be back with you in a fortnight’s time. Until then, let’s be eternally grateful that we live here in this magnificent country.

Warm Regards,

Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group

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