Australia | Apr 29 2010
By Chris Shaw
As Australia has recovered relatively quickly from the Global Financial Crisis (GFC) wealth levels have also risen, CommSec noting the total wealth held in property, shares and other assets by Australians is again approaching record levels.
CommSec estimates the average Australian has wealth equivalent to just over $253,000, which is just $7,500 below the record high set in December of 2007. Over the past year wealth has risen by 11.4%, while in the past quarter the increase has been 3.6% or almost $9,000 per person.
This is based on the Federal Treasury's “Modeller's Database”, which showed total private sector wealth in Australia of $5,568 billion as at the end of December last year.
At the same time as wealth levels are returning to previous levels, CommSec chief economist Craig James notes debt levels are continuing to decline, with private sector debt down by 5.6% over the past year.. This is the biggest fall in this measure for eight years, with per capita debt now standing at $26,500.
James points out in the middle of the GFC in 2008 Australian wealth levels declined on average by $21,000. This has quickly been made back, thanks to an average gain of $29,000 in 2009 and further improvement so far this year.
In James's view wealth should continue to rebuild in coming months, which is a positive for consumer sentiment and potentially for housing spending. With wealth levels having risen by 124% over the past decade, which is a 72% increase in real terms, James argues consumer balance sheets are in good shape.
As a result, he suggests it is little surprise more Australians are buying houses and travelling overseas, as their improving financial situation makes such moves a realistic option. At the same time stronger consumer balance sheets will, in James's view, give the Reserve Bank of Australia the confidence to continue to lift interest rates to keep economic growth and inflation in check.