CANBERRA, AAP – It may come as a surprise for some households, but their wealth saw its biggest quarterly growth in more than a decade, driven by rising house prices.
New Australian Bureau of Statistics figures show total household wealth grew by more than $500 billion in the final three months of 2020, a 4.3 per cent increase over the previous quarter and the largest since 2009.
Wealth per capita was also a record $467,709.
The bureau’s Katherine Keenan said this growth was driven by rising residential property prices, reflecting low interest rates, government support measures like HomeBuilder and pent-up demand from buyers.
“No wonder that people are feeling more confident and spending,” Commonwealth Securities chief economist Craig James said.
And it’s not just households that appear to be throwing off the shackles of last year’s deep recession.
Many businesses are also enjoying improved financial circumstances and are relying less on government support measures.
The bureau found in its latest business conditions survey that 46 per cent of firms expected it to be easy or very easy to meet their financial commitments over the next three months.
That compared with just 23 per cent back in August when the economy was still gripped by the pandemic.
“This latest survey also showed the proportion of businesses reporting decreased revenue halved over the same period, falling from 41 per cent in August to 22 per cent in March,” the bureau’s John Shepherd said on Thursday.
It also found the proportion of business using support measures has dropped to less than a third, compared with almost three quarters back in May.
Mr Shepherd said wage subsidies were the most common support measure accessed in March, with small businesses less likely to access this support (20 per cent) compared with medium (29 per cent) and large (23 per cent) firms.
Even so, Reserve Bank deputy governor Guy Debelle isn’t getting too carried away with the nation’s sharp recovery from recession, which has seen the jobless rate drop much faster than the central bank had expected.
Addressing senators on Wednesday night, Dr Debelle still thought the economic recovery was going to be “bumpy and uneven”.
In the near term, like Treasury, Dr Debelle expects the decline in the jobless rate may pause when the JobKeeper wage subsidy ends in a few days time.
Westpac senior economist Justin Smirk expects the unemployment rate could drift up to six or 6.1 per cent on the demise of JobKeeper in coming months, before resuming its improving trend.
Still, despite the rapid decline in the unemployment rate from a 22-year high of 7.5 per cent last July to 5.8 per cent in February, wage growth has remained subdued.
“Our view is still very much wage pressures are likely to be subdued for quite some time yet,” Dr Debelle said, adding that unemployment needs to be much lower.
Fronting a Senate estimates hearing on Thursday, Australian Prudential Regulation Authority chairman Wayne Byres assured senators Australia’s financial system remains fundamentally sound despite the considerable strains that come from the pandemic.
“It is welcome that the economic recovery is underway, but APRA is certainly well aware that there is some way to go, and that the recovery will be uneven across industries and regions,” Mr Byres said.