Finance News | Views | Clues

march 2021

 

HOUSEHOLD WEALTH & PROPERTY PRICES

Data released this week by the Australian Bureau of Statistics (ABS) shows that the nation's total household wealth increased by $501 billion in the December quarter, reaching a record high of $12 trillion. The estimated wealth per capita has in turn risen to a new high of $467,709.

Australian household wealth surged in Q4 2020 on the back strong rises in property and share values.

The surge in household wealth has been driven by factors such as recent strong growth in dwelling prices and the share market's rebound in the wake of the COVID-19 pandemic.


Strong property price growth was the biggest contributor to the rise in household wealth.

Specifically, residential assets (i.e. residential land and dwellings) grew by 3.5% ($246.5 billion) over the December quarter, which was the largest increase since the December quarter of 2016. Residential assets also contributed just under half (2.1%) of the 4.3% growth in quarterly household assets and two-thirds of the 7.0% growth in household assets over calendar year 2020.

However, while Australia's housing wealth soared, the ratio of housing-debt-to-income continued to fall, recording a 2.5% decline through 2020, which is the biggest decrease since 1990:

Australian households are dis-leveraging, despite the property boom.

While households are taking-out new mortgage commitments at a record pace. Households are also furiously repaying existing mortgages.

Accordingly, the outstanding stock of mortgage debt (mortgage credit growth) is barely growing and actually shrinking as a ratio of household incomes and gross domestic product.

This helps to explain why Australia's financial regulators are not too concerned about the property boom, since it does not yet point to financial instability.

The appetite for debt has never been higher as borrowers have the capacity to increase their debt levels due to the large amount of repayment they have done over the past year. This is reflected in the increased property prices and the resulting wealth effect it is having.
 

SEEK EXPERT HELP FROM US

The growth in finance applications has caused many lenders to have long delays in getting approvals. It can take up to three weeks before a file is even picked up and reviewed for approval. With settlement generally only six weeks this can cause significant stress to a number of borrowers. Here at M Point Finance we ensure that the process is a smooth one and that finance is approved well before settlement date. Be prepared and seek out a pre-approval now before making that property purchase.    

 
Reach out to Andrew (alennon@mpoint.com.au) and we can assist with your new financing needs.      

 

Important: M Point Financial Solutions Pty Ltd (Australian Credit Licence 391237) advises clients should not act solely on the basis of the material contained in the newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Newsletters are issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.