Believe it or not but the pandemic and the worst recession Australia has experienced in 90 years have not damaged Australia’s national finances (yet). In fact a glancing blow over two quarters might be the surprising conclusion from the latest data from the Australian Bureau of Statistics.
Forget all the worry, concern and mostly political moaning about the huge budget deficits and government debt.
While they are now with us for years to come, the first impacts of the COVID-19 pandemic and lockdowns are now behind us as Australia’s household wealth hit an all time high in the September quarter.
As we head toward 2021, the nation’s value is looking sounder than it ever has.The recovery in our national wealth this year has been quiet and unnoticed except by the boffins at the ABS.
According to the September quarter’s financial national accounts from the Australian Bureau of Statistics, total household wealth in Australia has regained and topped the levels pre-COVID.
The ABS said total household wealth increased 1.7% to an estimated record high of $11,.351 trillion, topping the previous high of $11.248 trillion in December quarter 2019, prior to the pandemic.
The September quarter figure is up $340 billion from the low of $10.991 trillion in the March quarter of this year.
Driving the latest rise was a 1.2% increase in residential assets (That’s higher house prices which has continued into the current quarter), a solid 5.4% rise in deposits (helping boost home lending and improve bank stability), and a 1.1% rise in superannuation balances (thanks to the surge in share prices here and internationally).
The ABS said average household wealth increased 1.6% (up $6,850) to $441,649 per person in the September quarter, similar to the growth of 1.5% recorded in the June quarter.
The ABS said a 0.1% increase in the population was the reason total wealth grew marginally more than average wealth. (But not in 2021).
“The September quarter 2020 financial accounts reflected improvements in the Australian and global financial markets, as well as a partial recovery of the domestic economy in response to government and RBA policies, and easing social restrictions across most of Australia,” the Head of Finance and Wealth at the ABS, Amanda Seneviratne said in a release.
The accounts show a $86.8 billion rise in the value of residential assets, recouping the losses experienced in the June quarter.
Holding gains of $73.6 billion on residential assets reflected the rebound in property prices as social distancing measures (restrictions on auctions and open house inspections) eased and economic conditions began to improve and bank finance became freely available.
The ABS said household deposits increased by a record $63.7 billion as households continued to save at elevated levels during the September quarter.
“Continuing government income support packages such as JobKeeper, economic support payments, and early access to superannuation were key drivers of the increase in deposits. This was in addition to the normal increase in deposits in September quarters due to tax refunds, according to the ABS.
“Demand for credit through financial intermediaries and markets was a record $154.9 billion thanks to the big rise in borrowing by Commonwealth and state governments. The ABS said this saw net government borrowings up $21.4 billion to $118.0 billion.
“This was the largest quarterly borrowing on record for general government, surpassing the $96.6 billion in the June quarter, and was financed mainly through the bond markets,” the ABS pointed out.
All this as Australians drew down tens of billions in super, deferred loan repayments, then restarted them, some with help from their lenders, and paid down credit card debt and in many cases, closed off card accounts and switched to debt cards. And they hoarded over 13 billion in cash at the start of the year.
