Some fabulous news just coming in from the Australian Bureau of Statistics: household wealth in Australia rose by 1.5% or $250 billion, during the June 2024 quarter. The seventh consecutive quarter of growth, the recovery and resiliency within the economy can be truly envisioned. Total household wealth has grown to an incredible $16.5 trillion, and that is a pretty good uptick of about 9.3% compared with the same quarter last year.
The key drivers of growth
Households’ main driver in the rise of their wealth is the increase in the value of residential properties. Residential land and buildings accounted for a significant increase of 1.3 percentage points in quarterly growth, ABS said. Most states and territories have continued to see rising house prices, even with increasing interest rates, which is somehow challenging. Housing supply conditions have largely led to this and increased investor demand during the quarter.
The head of finance statistics at ABS points out that “house prices have continued to rise across most states and territories, despite high interest rates. This reflects largely ongoing housing supply constraints and an uptick in investor activity over the quarter.” This information shows that there is still a competition between supply and demand in the real estate market, which doesn’t give an advantage to the homebuyers.
Effect of Superannuation Assets
Increase in residential property values have also been contributed to by superannuation assets in household wealth. Within the June quarter, there has been an increase in superannuation assets by a relatively modest 0.3% or $13.7 billion. Though it is not as robust as that during the residential property market, this growth does add some positive growth in households’ overall wealth in Australia.
At the same time, an increase in superannuation assets was very essential in the context of more profound economic challenges. The emergence of such increases in superannuation assets emphasises long-term savings and investment strategies for the individuals and the families that can generally secure their financial futures even during uncertain times.
Changes in Banking and Credit Demand
Another major change in the finance landscape is taking place in Australia: the last Term Funding Facility (TFF) allowance, which was available up to June 30th, has ended and altered the funding environment for the banks. Banks’ exchange settlement accounts with the Reserve Bank drastically dropped, with $105 billion in securitized bonds returning to bank balance sheets.
In order to maintain high liquidities, banks resorted to more traditional sources of funding. They purchased national government bonds worth $23.1 billion as well as semi-government bonds amounting to $16 billion. This establishes a return to more traditional banking activities following the exceptional measures undertaken during the pandemic.
Despite the trends, demand for credit is still strong in Australia. Total demand of credit stood at $97.9 billion, whereby households came at $57.5 billion and private business at $36.9 billion. The substantial rise in demand for credit signals that Australians are still eager to invest in their future, whether through property acquisitions or business expansion.
Implications to First Home Buyers and Investors
This can easily benefit the first home buyers and investors but create both opportunities and challenges at the same time. Rising property values make hard prospects for property finding among first-time buyers. However, those who are homeowners or investors in such homes receive a great opportunity to refinance and acquire additional funds through that increment in equity.
It can help you unlock the equity in your property so that all your funds become available to finance your next investment or other financial goals. In this context, making contact with a knowledgeable mortgage broker would prove useful. A broker can guide you through market complexities, discuss your choices, and find the best financing solutions that match your needs.
Reasons for Seeking Professional Advice
This is also very helpful as the dynamics of the property market together with various financial instruments available make it very useful to consult a professional for advice. Mortgage brokers, like ASK Financials, are properly qualified to provide you with information for the proper decision-making process. They can provide information regarding market trends, assist you in securing pre-approval for loans, and also guide you through the refinancing process.
Our team at ASK Financials knows the intricacies of the Australian property market. We are committed to our clients’ success in achieving their personal goals through using specific, customised strategies unique to their individual situation. Do you intend utilising a home office space or are you looking at placing a deposit on your second investment? Let our fully qualified financial planners work with you every step of the way.
Seize the Opportunity
Very good news indeed in Australia has been the growth in household wealth; it has been of great benefit to the economy and also to so many people, with increases in property values and high demand for credit, now is a great time to give serious consideration to your financial strategies. Whether you are buying your first home or refinancing, investing-guidance will make a difference to the options available to you.
Not alone to navigate this landscape, contact ASK Financials today to book your discovery call with the experts. Let’s help you explore your options, access the equity in your home, and propel your investment goals. Together, we can build a brighter financial future for you and your family.
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