Oct 20, 2021
The average Australian is wealthier now than at the start of the pandemic. In fact, they’re richer than they’ve ever been before.
Surprising as it may be, the pandemic pushed up personal financial wealth. In a recent report by the Australian Bureau of Statistics (ABS - June 21 quarter), it was found that net household wealth rose by $735 billion to a record $13.3 trillion. That’s a 5.8 percent jump.
This seems counter to everything we’ve heard about the impact of the pandemic. Here’s some reasons why.
Residential property prices provided a wealth boost
At the beginning of the pandemic, many predicted a contraction or collapse of the Australian property market. We got the opposite. And because of this, property accelerated the wealth of Australian households more than any other asset. According to the ABS, “residential property assets contributed 4.5 percentage points to the quarterly growth in household wealth.”
There were significant government incentives for first-time homeowners and new builds, interest rates have been kept to record lows while access to capital was made easier. This led to sky-high consumer demand that outstripped supply at levels not seen for years.
The share market accelerated super
While property has been the biggest driver, the share market has played a big role in our wealth growth. Again, there were predictions of a big collapse. We got an initial dip, but then a huge bounceback. This saw superannuation and share holdings rise by $130 billion to a gross $4.7 trillion.
Lockdowns forced Aussies households to save
No international holidays, working from home and lockdowns meant families saved more cash. Generally, there has been much less reason to spend, and less to spend on.
Early in the pandemic there were also government handouts that many Australians qualified for, helping prop up savings and rainy day funds.
And with this came the mindset shift. For many, the pandemic has brought about a reality check that saving is not just important, it is essential. We can’t always see what is around the corner, and uncertainty continues to loom, so having money set aside is a must for all families.
Ensure you capitalise on wealth opportunities
When there are opportunities to grow wealth, you take them. Working closely with your financial adviser ensures that you have a strategy to set you and your family up for success, so that you can capitalise but also take steps to lower your risk in the future.
Are you prepared?
Talk to the team at Calder Wealth Management to schedule a no obligations discussion about your needs. Call us on (08) 8373 3333.
Written by Ben Calder at Calder Wealth Management.
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.
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