<p>A new 25-storey apartment tower proposed for Mercer Street would push Geelong’s western gateway skyline higher, with Morphy Birrell Property Group lodging plans for a project directly beside one of the city’s most significant heritage streetscapes.</p>

<p>The <a href="https://www.apartments.com.au/architects/fk-australia">FK</a>-designed development at <a href="https://www.apartments.com.au/new-apartments/65-67-mercer-street-geelong-vic-3220">65-67 Mercer Street</a> has now been referred to Victoria’s Planning Minister. The site sits opposite the Geelong rail corridor and immediately south of the heritage-listed St Peter and Paul’s Catholic Church and Ashby Hall precinct.</p>

<p>Rather than compete with the neighbouring ecclesiastical buildings, the proposal adopts a sculpted podium intended to reference the materiality and scale of the heritage context. Planning documents note the design draws cues from the “dark stone brick” church and surrounding masonry buildings, while the tower above transitions into a softer, curved form oriented toward Corio Bay and the Geelong waterfront.</p>

<p><img alt="First look: Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct" data-entity-type="file" data-entity-uuid="b797d10c-d4a6-47af-b8df-1aeaa3b382be" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/public%20square.png?VersionId=QGIpcz1x1hKB6lQLl2iobyHqb6PS2Ztc" /></p>

<p>The development forms “Stage 5” of Morphy Birrell Property Group’s broader Mercer Street precinct strategy, following the completion of the 21-storey Miramar tower on Cavendish Street and several additional approved redevelopment stages nearby. Planning consultants Ratio said the proposal “represents an exemplary development outcome” aligned with the strategic ambitions for Central Geelong’s continued urban renewal.</p>

<p>The mixed-use project would replace an existing low-rise commercial building and surface parking area on the 3,320 sqm corner site. FK’s urban context report describes the proposal as a residential development comprising apartments, resident amenities, commercial space, and integrated landscaping positioned to maximise bay views and northern sunlight access.</p>

<p>Renders show a deeply articulated tower with curved balconies stepping above a lower masonry podium that frames a landscaped forecourt facing Mercer Street. The design intentionally preserves sightlines toward the adjacent church buildings, with the podium scaled to reinforce the heritage edge before the tower recedes upward.</p>

<p><img alt="First look: Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct" data-entity-type="file" data-entity-uuid="2bdca91e-66f7-4ac7-8baa-2f93bd5b564e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/geelong%20site.png?VersionId=QOhbino4ZgzKYw5dW3QE14E.2yq.Sv87" /></p>

<p>The planning report highlights the site’s strategic location within 400 metres of key Geelong destinations including Cunningham Pier, the Geelong Station precinct, Deakin University, and the convention centre. Bus services run directly along Mercer Street, while the Corio Bay foreshore sits around 100 metres north of the site.</p>

<p>The proposal arrives amid accelerating redevelopment across central Geelong, where planning policy continues to encourage higher-density housing close to transport infrastructure and the waterfront. Mercer Street in particular has emerged as a focal point for taller apartment development due to its proximity to Geelong Station, the bay, and major civic infrastructure.</p>


Joel Robinson

Morphy Birrell Property Group targets 25-storey Geelong tower beside landmark church precinct

<p>Development giant&nbsp;<a href="https://www.apartments.com.au/developers/hamton">Hamton</a> and joint venture partner Hostplus have revealed the next residential stage of their $3 billion Moonee Valley Park masterplan, lodging plans for 512 more apartments within the precinct on surplus racecourse land at 110 Wilson Street, Moonee Ponds.</p>

<p>The proposed development, dubbed&nbsp;<a href="https://www.apartments.com.au/new-apartments/trackside-house-110-wilson-street-moonee-ponds-vic-3039">Trackside Gardens</a>&nbsp;in the planning application, follows the <a href="https://www.apartments.com.au/news/vic/first-look-exclusive-hamton-and-hostplus-reveal-sixth-stage-of-moonee-valley-park-masterplan">recent unveiling of the sixth-stage Cox Place Precinct</a> and continues the long-running transformation of the Moonee Valley Racecourse into one of Melbourne’s largest urban renewal projects.</p>

<p>Positioned on the north-eastern edge of the racecourse adjacent to CityLink, Trackside Gardens will comprise three residential buildings rising between 61.8 metres and 86.4 metres within a heavily landscaped precinct shaped by Hamton’s Nature Based Cities framework.</p>

<p>The project forms part of the broader Moonee Valley Park redevelopment being delivered by Hamton, Hostplus and the Moonee Valley Racing Club, which is reshaping the 40-hectare racecourse site into a mixed-use neighbourhood with housing, retail, commercial space, hotels, parkland and community infrastructure.</p>

<p>Trackside Gardens sits separately to the recently proposed Cox Place Precinct, a five-building stage comprising around 1,100 residences, two build-to-rent buildings, two build-to-sell towers, retail, office space, and a hotel overlooking the racetrack. Together, the projects continue to accelerate housing delivery across the precinct.</p>

<p><img alt="First look: Hamton expands Moonee Valley Park masterplan with 512-home Trackside Gardens precinct" data-entity-type="file" data-entity-uuid="5fc1941e-52d3-41c6-abc4-0f13fe8ae5ea" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/DA%20Edits%20%281%29.png?VersionId=7qwRHq5dcvXWNot2hNOgoQhN2GIWudNK" /></p>

<p>Designed by <a href="https://www.apartments.com.au/architects/dko-architecture">DKO Architecture</a> with landscape architecture by Tract, Trackside Gardens has been conceived as a botanical-style residential precinct prioritising canopy planting, communal green space, and vertical landscaping.</p>

<p>“The architectural vision for the proposed development centres around buildings in a botanical park setting that champions the important role of nature,” the planning submission states.</p>

<p>“The proposal incorporates principles of biophilic design, with landscape and environmentally sustainable development influencing the ultimate design response of the buildings and prioritising the ground plane to ensure a high amenity for both occupants and visitors.”&nbsp;</p>

<p>Trackside Gardens will deliver 512 apartments across the three buildings, alongside 518 basement car spaces and 523 bicycle spaces. Around 20 per cent affordable housing is proposed across the broader North East Precinct, equating to around 158 dwellings.&nbsp;</p>

<p>The affordable housing component will be concentrated within the Wilson East building, while the remaining apartments are expected to be delivered as build-to-sell residences.</p>

<p>Trackside Gardens has been designed around Hamton’s Nature Based Cities initiative, founded by Executive Chair Paul Hameister OAM in partnership with the University of Melbourne, Urbis, Ark Resources and Tract. The initiative promotes integrating higher-density urban development with significant biodiversity, tree canopy and landscape outcomes.</p>

<p><img alt="First look: Hamton expands Moonee Valley Park masterplan with 512-home Trackside Gardens precinct" data-entity-type="file" data-entity-uuid="89353449-7b3c-42fd-8fd8-8bf64a5ef80f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_4.png?VersionId=X8jRt0P2L7fIWjLhfX6gPknXToXIBeLj" /></p>

<p>A comprehensive landscape strategy would introduce deep soil planting, vertical greening, communal gardens, and new pedestrian links throughout the site.</p>

<p>Planning documents state the development is targeting a 5 Star Green Star Buildings rating, a 7.5-star average NatHERS rating, and “Exemplary” Nature Based Cities certification.&nbsp;</p>

<p>The proposal joins an expanding pipeline of approved and proposed buildings within Moonee Valley Park, including the recently launched Eveline apartments and the approved Grandstand North and South towers.</p>

<p>Hamton has increasingly focused on precinct-scale, nature-led communities across Melbourne’s middle-ring suburbs, with projects spanning Hawthorn, Kew, and Moonee Ponds.</p>


Hampton unveils Trackside Gardens, latest stage of $3 billion Moonee Valley Park masterplan

<p>The Paul Gedoun-led <a href="https://www.apartments.com.au/developers/ss-projects">S&amp;S Group</a> has achieved another milestone in its $1 billion transformation of Rainbow Bay on the southern Gold Coast with the completion of the company’s third project in four years, the $160 million <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a> residences.</p>

<p>Delivered by <a href="https://www.apartments.com.au/builders/hutchinson-builders">Hutchinson Builders</a> and designed by <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker Architects</a>, Esprit buyers have now moved into the 94 apartments across two interconnected buildings at 217-227 Boundary Street.</p>

<p>The successful settlement of Esprit marks another astounding chapter in the S&amp;S story, which launched its highly successful Flow apartments three years ago and created its own ultra-luxury branded fingerprint on an area craving new luxury residences.</p>

<p>Most early purchasers have secured gains of well over $1 million since the project launched in 2021.&nbsp;</p>

<p>[smartcode_project:default project_id=102921 project_image_fid=172129]</p>

<p>S&amp;S Projects Founding Director Paul Gedoun said the completion of Esprit reflects sustained demand for premium apartments in tightly held coastal locations.&nbsp;<br />
&nbsp;&nbsp; &nbsp;<br />
“Esprit has attracted buyers seeking a combination of quality design, considered amenity and a location that is becoming increasingly difficult to replicate,” said Gedoun.</p>

<p>“We identified some years ago that Rainbow Bay is a unique market where supply of luxury residences is limited, and we see the settlements in Esprit further underpinning this thinking - that for both owner-occupiers and investors.”&nbsp;</p>

<p>[smartcode_project:default project_id=102921 project_image_fid=172174]</p>

<p>A key feature of the development is ‘Club Esprit’, a 1,000sqm residents-only rooftop level combining wellness and recreation, believed to be a first for the Gold Coast, and which is fast becoming a signature of the S&amp;S brand.</p>

<p>Positioned to capture views across Snapper Rocks, Rainbow Bay and the Tweed River, the rooftop includes a 25-metre lap pool, gym, yoga lawn, sauna and steam facilities, ice bath, private dining spaces, outdoor cinema and landscaped areas for residents.&nbsp;</p>

<p><a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a> Director Jayde Pezet, who led the sales campaign for Esprit and S&amp;S’s Flow and Awaken apartments, said the project’s performance reflects both the strength of the product and the depth of demand for premium apartments on the southern Gold Coast.&nbsp;</p>

<p>“In some cases, we’ve seen values double since launch, which is a clear reflection of how tightly held Rainbow Bay has become and the level of demand for well-executed projects in this market,” said Pezet.&nbsp;</p>

<p>“Buyers recognised early what S&amp;S Projects was delivering here, and that conviction has been rewarded as the project has progressed towards completion.”&nbsp;</p>

<p>[smartcode_project:default project_id=102921 project_image_fid=214819]</p>

<p>Esprit offers a mix of two- three and four-bedroom apartments and sits within walking distance of the beachfront, cafés and local amenities, reinforcing its appeal as both a lifestyle and investment destination.</p>

<p>The project is the third completed by S&amp;S Projects in Rainbow Bay, following Flow Residences and Awaken Residences, which together have contributed to the suburb’s emergence as one of the Gold Coast’s most sought-after coastal pockets. &nbsp;</p>

<p>S&amp;S Projects is continuing its investment in the area with Radia, a $215 million development currently under construction.&nbsp;</p>

<p>[smartcode_project:default project_id=102921 project_image_fid=172175]</p>

<p>Gedoun said the completion of Esprit signals continued confidence in the southern Gold Coast market.&nbsp;</p>

<p>“We’ve seen strong interest in well-located, high-quality apartments, particularly in areas where future development opportunities are limited."</p>

<p>“That’s been a key factor in the performance of Esprit and the broader Rainbow Bay market”.</p>

<p>[smartcode_project_cta:default project_id=102921]</p>


Owners move in as Esprit completes at Rainbow Bay

<p>Few developers can boast a portfolio across South East Queensland's luxury markets quite like <a href="https://www.apartments.com.au/developers/mosaic-property-group">Mosaic Property Group</a>.</p>

<p>The builder-developer, founded in 2004 by Managing Director Brook Monahan, has projects in planning, on the market, and under construction, from Burleigh Heads and Broadbeach to Kangaroo Point and South Brisbane.</p>

<p>With a pipeline exceeding $2 billion, Mosaic remains highly selective when it comes to development sites, having spent years refining its strategy around feasibility research and product planning. The group is set to continue growing into 2026 and beyond.</p>

<p>In Brisbane, Mosaic currently has three projects in the market. It is in the final release stage at <a href="https://www.apartments.com.au/new-apartments/the-bedford-by-mosaic-16-30-prospect-street-kangaroo-point-qld-4169">The Bedford</a> in Kangaroo Point, which is approaching complete sellout ahead of its late 2027 completion.</p>

<p>[smartcode_project:default project_id=134792 project_image_fid=328123]</p>

<p>Designed in collaboration with <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, The Bedford comprises 128 two- and three-bedroom residences. A selection of ultra-luxury Masterpiece Series Skyhomes, positioned across the top levels, offer expansive floor plans and sweeping views of the river and city.</p>

<p>High-end inclusions, such as natural stone benchtops, bespoke cabinetry, and Miele appliances, feature throughout all apartments, alongside the Rooftop Recreation &amp; Retreat Sky Terrace. This includes a resort-style pool with sun deck and loungers, spa, cold plunge pool, sauna, steam room, private dining room with a full kitchen, residents' lounge, multiple barbeque and relaxation zones, an outdoor viewing deck, and landscaped gardens with water features, all oriented to sweeping city and river views.</p>

<p>A gym with indoor and outdoor zones, and a golf simulator, further enhances recreational choice within the building.</p>

<p>[smartcode_project:default project_id=134792 project_image_fid=328119]</p>

<p>A defining feature of the development is its integrated mixed-use component, which will deliver Kangaroo Point's first major supermarket, alongside a café and liquor store, bringing long-awaited convenience to the peninsula.</p>

<p>Monahan says The Bedford represents the culmination of a near-decade-long journey, after first identifying the A-grade Prospect Street site in 2016. While they came close to acquiring it at the time, the site was ultimately purchased by Woolworths' development arm, Fabcot. The opportunity resurfaced in 2024 when the site, vacant for nearly three decades, was brought back to market.</p>

<p>Monahan says Mosaic projects often begin years before any formal plans are drawn. Their new South Brisbane development is no exception, with the site first earmarked in 2018.</p>

<p>"We aren't opportunistic," Monahan says. "Every site purchase is carefully considered. As seen with Kangaroo Point and South Brisbane, it can take years to eventuate. There are sites we're looking at now that we may not secure for several years."</p>

<p>[smartcode_project:default project_id=141711 project_image_fid=353495]</p>

<p>A similar story unfolded at <a href="https://www.apartments.com.au/new-apartments/the-carter-by-mosaic-77-linton-street-kangaroo-point-qld-4169">The Carter</a> in Kangaroo Point, opposite The Gabba. Like The Bedford, it is also approaching sellout of its 125 two- and three-bedroom apartments. The majority of sales are attributed to returning customers and referrals, with a balanced mix of investors and a strong majority of owner-occupiers.</p>

<p>BDA Architecture was again engaged to design the 22-storey building, which will feature a suite of wellness and lifestyle amenities, including a golf simulator and cinema, a commercial-grade gym, and a rooftop recreation level with a pool, steam room, sauna, cold plunge, teppanyaki bar, private dining spaces, and landscaped terraces.</p>

<p>Construction is on track for completion in mid-2027.</p>

<p>[smartcode_project:default project_id=151614 project_image_fid=362759]</p>

<p>Mosaic's latest offering is its most ambitious yet, boasting a rare, north-facing riverfront position on Montague Road in South Brisbane.</p>

<p><a href="https://www.apartments.com.au/new-apartments/the-riversdale-by-mosaic-south-brisbane-91-montague-road-south-brisbane-qld-4101">The Riversdale by Mosaic</a> is a 39-storey tower comprising just over 200 residences and Masterpiece Series Sky Homes. Designed in partnership with Bureau Proberts, it will feature nearly 3,000 sqm of genuine, internationally benchmarked six-star, hotel-style amenities, including a wellness precinct, pool, gym, massage and treatment rooms, cinema, golf simulator, and extensive outdoor dining areas across a two-level rooftop deck.</p>

<p>Early works are underway, with full construction expected to commence in the second half of 2026, and an anticipated late 2029 completion.</p>

<p>[smartcode_project:default project_id=151614 project_image_fid=362759]</p>

<p>Since 2012 alone, Mosaic has completed more than $2 billion in projects and is set to deliver another $2 billion worth of developments, comprising hundreds of luxury apartments, each defined by Mosaic's signature standards of quality, detail, and delivery.</p>

<p>"We never arrive, there is no finish line," says Monahan. "Our ambition is to keep evolving what luxury means, creating design- and lifestyle-led residences in incredible locations, places people genuinely aspire to and want to live, homes that are loved deeply and endure long beyond their moment."</p>


Mosaic's Midas Touch

<p><a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> (Urban) has broken ground at Keira Place, its new major mixed-use residential precinct in the heart of Wollongong CBD.</p>

<p>Held at 120-122 Smith Street, the groundbreaking marked the commencement of construction on Stage 1 of <a href="https://www.apartments.com.au/new-apartments/keira-place-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, with the opening of the new display suite.<br />
&nbsp;<br />
Keira Place is a State Significant Development that will deliver new housing supply, affordable homes and inclusive living options within walking distance of Wollongong’s CBD, coastline, transport, hospital and education precincts.</p>

<p>[smartcode_project:default project_id=144442 project_image_fid=369868]<br />
&nbsp;<br />
Stage 1 is now under construction and will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, along with activated ground-floor retail and commercial space.<br />
&nbsp;<br />
Urban Co-CEO Patrick Elias said the groundbreaking represented a significant milestone for Wollongong and reflected Urban’s long-term commitment to regional cities.</p>

<p>“Today’s groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong’s city centre,” Elias said.<br />
&nbsp;<br />
“Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection.”</p>

<p>[smartcode_project:default project_id=144442 project_image_fid=369869]<br />
&nbsp;<br />
Hon. Paul Scully MP, Minister for Planning and Public Spaces, Member for Wollongong said Keira Place is exactly the kind of development Wollongong needs – delivering new homes close to transport, employment and services, while supporting the continued growth and renewal of the CBD.</p>

<p>"This project reflects the Minns Labor Government's commitment to increasing housing supply in well-located areas."<br />
&nbsp;<br />
Wollongong Lord Mayor Cr Tania Brown said Keira Place would deliver lasting community benefits for the city.<br />
&nbsp;<br />
"Keira Place is a welcome addition to Wollongong's CBD delivering new housing, affordable homes and activated street-level spaces that will benefit our community for years to come," Brown said.<br />
&nbsp;<br />
"Urban Property Group's investment reflects the confidence that quality developers have in Wollongong's future, and I look forward to seeing this precinct come to life."</p>

<p>[smartcode_project:default project_id=144442 project_image_fid=369867]<br />
&nbsp;<br />
Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">Cox Architecture</a>, with interiors by <a href="https://www.apartments.com.au/interior-designers/dko">DKO,</a> Keira Place prioritises liveability and long-term performance, with landscaped shared spaces, generous apartment layouts and a pedestrian-friendly streetscape along Smith Street.<br />
&nbsp;<br />
Residents will have access to landscaped podium areas, communal rooftop amenities with views to Mount Keira and the Wollongong skyline, and convenient ground-level retail.</p>

<p>The development will have 10-year Latent Defects Insurance by Resilience Insurance.</p>

<p>[smartcode_project_cta:default project_id=144442]</p>


Groundbreaking marks start of construction at Keira Place in Wollongong CBD

Household Wealth

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<p>EXPERT OBSERVER</p>
<p>The ABS data showed that at the end of the March quarter, household net worth was $10.243 trillion.</p>
<p>While a large figure, household wealth has now fallen for two consecutive quarters and is -0.7% lower year-on-year. The $10.243 trillion in net worth is madeup of $12.701 trillion in assets and $2.458 trillion in liabilities. The recent fall in the value of assets at a time in which liabilities have continued to rise has led to the fall in net worth.</p>
<p>The Reserve Bank (RBA) analyses this data to produce a number of valuable ratios, including: debt, assets and interest payments to household disposable income.</p>
<p>These ratios highlight the impact of high levels of debt at a time in which asset values have fallen but the debt has not fallen at the same pace.</p>
<p>We’ve seen the ratio of household debt to disposable income continue to climb over the quarter, reaching a new historic high of 189.7%. The rise in household debt relative to incomes has certainly slowed; however, it continues to edge higher.</p>
<p>The ratio of housing debt to disposable income is recorded at 140.1% and was unchanged over the quarter. While it was unchanged over the quarter, it remains at an historic high level, highlighting that households remain very sensitive to the cost of mortgage debt.</p>
<p>Turning to the ratio of household assets to disposable income, it was recorded at 927.0% in March 2019. The ratio peaked at 961.7% in December 2017 and has trended lower since. The ratio of housing assets to disposable income peaked at 529.6% in December 2017 and as at March 2019; it was recorded at 483.5%.</p>
<p>The reduction in housing values has coincided with the period in which the ratio of household and housing assets has fallen which is no wonder when you consider housing accounts for around half of the value of household assets. </p>
<p>It's also important to consider is that while the value of assets are falling there has been no reduction in the ratios of debt to income which highlights that asset depreciation has been greater than debt reduction. As a result, the ratio of household debts to assets is at 20.5%, the highest it has been since December 2014 and the ratio of housing debt to assets is at 29.0%, the highest it has been since June 2013.</p>
<p>Despite the lowest interest rates since the 1960s, the ratio of interest payments to disposable income has trended higher years. As at March 2019 the ratio was recorded at 9.1% and although it has been steady for three quarters, interest payments relative to disposable income has trended higher on an annual basis</p>
<p>Furthermore, the ratio of interest payments to disposable income was last this high in September 2013. It is a similar story for the ratio of housing interest payments to disposable income, which is also trending higher, recorded at 7.6%, which is the highest ratio since June 2013.</p>
<p>With interest rates at generational lows there was perhaps, some expectation that households would use the low rates to pay off some debt however that has largely not occurred. With asset values recently falling the data shows that debt pay off has not been as rapid as the declines leading to a reduction in household wealth.</p>
<p>This data is to March 2019 and by the end of June 2019, there were some tentative signs that the declines in dwelling values were starting to level. While this means that there is likely to be a further decline in household wealth over the June quarter, it also suggests there is unlikely to be a meaningful reduction in household debt levels.</p>
<p>As such, household debt levels are likely to remain amongst the highest in the world. At the same time, the value of household assets remain substantially higher than the value of the debt. The cause for concern will be what happens if economic conditions deteriorate materially, leading to weaker labour market conditions and potentially creating some challenges around servicing such high levels of debt as unemployment rises.</p>
<p>Another medium to long-term consideration is a scenario where interest rates eventually start to rise. Households are generally able to service high levels of household debt while interest rates are at record lows, but eventually (probably not for at least several years) interest rates will rise.</p>
<p>If household debt levels remain high relative to incomes under a higher interest rate environment, the result could be weakness in household spending (as households dedicate more of their income towards servicing their debt) and potentially higher levels of financial stress amongst heavily leveraged households.</p>
<p><em>CAMERON KUSHER is the head of research for the Australian branch of CoreLogic</em></p>
<p><em>Kusher regularly posts on the <a href="https://www.corelogic.com.au/news" target="_blank">CoreLogic website</a>.</em></p>
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ckusher-ujnxiKuFQs

Australian Household wealth falling while debt remains: Cameron Kusher

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<p>Household financial comfort fell across regional Australia during the six months to December 2019, according to ME Bank’s latest Household Financial Comfort Report.</p>
<p>While ME Bank’s latest biannual survey showed the financial comfort of metropolitan households increased 3% to 5.76 out of 10 to near record highs – especially in eastern Australia – financial comfort for regional households fell 4% to 5.08, continuing a decline over the past year to approach its lowest point in the past eight years.</p>
<p>ME’s Consulting Economist, Jeff Oughton, said the gap in financial comfort between regional and metropolitan households had now reached a record 13%, almost twice the historical average of 7%.</p>
<p>“The sharp fall in financial comfort in regional areas is likely a result of ongoing drought and recent bushfire catastrophes, which have significantly lowered already low levels of financial comfort."</p>
<p>"‘Comfort with cash savings’ fell 9% and the ‘ability to deal with financial emergencies’ fell 7%, while long-term retirement comfort deteriorated, with ‘anticipated standard of living in retirement’ down 7%."</p>
<p>"Regional Queensland reported the largest fall in comfort, down 14% to 4.95, dipping below regional New South Wales (5.09) and Victoria (5.20)."</p>
<p>“In contrast, the improvement in the financial comfort of metropolitan households reflected significant gains in all key drivers, with record high levels of comfort approached in Sydney (up 1% to 5.94), Melbourne (up 3% to 5.91) and Brisbane (up 10% to 5.82).”</p>
<p><strong>Record low mortgage rates and rising house prices improving comfort with debt in the major cities</strong></p>
<p>Across the 11 key drivers that make up ME’s Household Financial Comfort Index, the biggest improvement was with ‘comfort with debt’, up 5% to 6.55 out of 10, reaching record highs. ‘Comfort with debt’ increased 7% for households in metropolitan areas, particularly those with mortgages on their homes or on an investment property.</p>
<p>“Significantly lower home loan rates and relatively low and stable unemployment rates helped to significantly improve ‘comfort with debt’ – especially in major capital cities, while a partial reversal of the fall in residential property prices in eastern capital cities and expectations of further price gains have also eased gearing concerns,” said Oughton.</p>
<p>Mortgage stress eases further and expected debt management improves Consistent with a significant fall in home loan rates, sustained low unemployment and improved property prices in most of Australia, mortgage stress eased a bit further during the past six months.</p>
<p>Nevertheless, there remains generally high levels of mortgage stress and significant other financial stress amongst households.</p>
<p><strong>Record low Reserve Bank official interest rates helping, but divide households </strong></p>
<p>For the first time in the latest survey, ME asked households if they thought they were ‘better’ or ‘worse off’ as a result of the historically low official interest rates.</p>
<p>Overall, slightly more households reported being better off (27%), compared to worse off (23%), while the remaining half of households reported they weren’t impacted positively or negatively.</p>
<p>“Those households paying off a mortgage felt they were far better off than those renting or who already own their homes. When it came to investors with debt, results show they feel they’ve benefitted the most (60% ‘better off’) from the flow on to record low mortgage rates – an indication of the high level of gearing among residential property investors in Australia.”</p>
<p>In terms of life stage, young singles and couples with no children appeared to be the biggest winners, with over half (51%) saying they were ‘better off’, followed by couples with young children (41%).</p>
<p><strong>Property price optimism revised higher</strong></p>
<p>The report revealed household optimism regarding the outlook for residential property prices has continued, with both owner occupiers (47%) and investors (51%) revising up price expectations for 2020.</p>
<p>Brisbane investors and owner occupiers were the most optimistic about higher property prices (67% and 61%, respectively), followed by Melbourne owner occupiers (55%) and Sydney investors (51%). Owner occupiers in Perth (29%) remain the least optimistic in this regard.  </p>
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j.ballantyne1990-6AQqhLzZaK

Household financial comfort fell across regional Australia: ME Bank

<html><body>
<p>GUEST OBSERVATION</p>
<p>The latest data from the Australian Bureau of Statistics confirms household wealth has fallen, on the back of falling house prices, in the past year.</p>
<p>But it’s not all bad news. There are signs of hope in the portents for the next six months.</p>
<p>During the first quarter of this year, the net worth of all Australian households rose 0.2% to A$10.2 trillion. Total household net worth in March 2019 was 0.7% lower than in March 2018, largely because of steep falls over the final six months of 2018.</p>
<p>The per capita annual decline was larger, falling by about 2.4%, because of population growth. This means the average wealth of Australians dropped by about A$9,500, from A$414,400 to A$404,900.</p>
<p><a href="https://images.theconversation.com/files/281542/original/file-20190627-76734-mgok7i.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281542/original/file-20190627-76734-mgok7i.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a></p>
<p><em><span class="attribution"><span class="source">(Source: ABS)</span></span></em></p>
<p>This household “balance sheet event” – defined as an annual decline in household sector net wealth – is the third in the past 30 years. The other two were through the Global Financial Crisis of 2008 and immediately after.</p>
<p>Housing (land and dwellings) comprises 52% of household-sector assets. Superannuation comprises 24%. Property values fluctuate with real estate prices, while superannuation is highly exposed to volatility within the financial markets.</p>
<p><strong>Consumer spending</strong></p>
<p>The next chart highlights the relationship between changes in household net worth and spending on discretionary items and durable goods.</p>
<p><a href="https://images.theconversation.com/files/281543/original/file-20190627-76705-1x1u3cv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281543/original/file-20190627-76705-1x1u3cv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> </p>
<p><em><span class="attribution"><span class="source">(Source: ABS)</span></span></em></p>
<p>But what is interesting is that consumer sentiment has not been significantly affected.</p>
<p>The following chart shows household net worth vs Westpac’s consumer sentiment data. This is the first major downturn in household net wealth in 30 years that has not coincided with weaker consumer sentiment.</p>
<p><a href="https://images.theconversation.com/files/281544/original/file-20190627-76743-j7e3bv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281544/original/file-20190627-76743-j7e3bv.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a></p>
<p><em><span class="attribution"><span class="source">(Source: ABS &amp; Westpac)</span></span></em></p>
<p>It’s hard to know for certain why consumer confidence has remained relatively steady, but two things stand out.</p>
<p>First, the consumer financial adjustment has been orderly and deliberate as opposed to rapid and forced. It appears people have consciously adjusted spending and savings patterns to achieve long-term savings goals.</p>
<p>Second, there has been ongoing strength in the labour market. Despite falling wealth, people still have jobs and this reinforces confidence.</p>
<p><strong>Shares and housing stocks</strong></p>
<p>It is safe to say consumers will start spending more once they feel their asset position has stabilised.</p>
<p>Strong equity markets have played a big role in shoring up household wealth since the start of this year. As the next chart demonstrates, they could continue to do so over the period ahead.</p>
<p><a href="https://images.theconversation.com/files/281545/original/file-20190627-76701-g5i77p.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281545/original/file-20190627-76701-g5i77p.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a></p>
<p><em><span class="attribution"><span class="source">(Source: ABS &amp; Bloomberg)</span></span></em></p>
<p>But the big swing factor is house prices – specifically land values. The Reserve Bank’s interest rate cuts should help stabilise house prices over the second half of 2019.</p>
<p>Our last chart suggests this appears to have started, with auction clearance rates improving in recent months.</p>
<p><a href="https://images.theconversation.com/files/281548/original/file-20190627-76722-ruuein.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/281548/original/file-20190627-76722-ruuein.png?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a></p>
<p><em><span class="attribution"><span class="source">(Source: ABS &amp; CoreLogic &amp; Bloomberg)</span></span></em></p>
<p>This all suggests household wealth could start growing again in the second half of the year. That should go a long way to stabilising the economy.<img src="https://counter.theconversation.com/content/119001/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;"></p>
<p><em><strong>Warren Hogan</strong>, Industry Professor, University of Technology Sydney.</em></p>
<p><em>This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/australian-household-wealth-has-taken-its-biggest-dive-since-the-gfc-but-things-are-looking-up-119001" target="_blank">original article</a>.</em></p>
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Australian household wealth has taken its biggest dive since the GFC, but things are looking up: Warren Hogan

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<p class="article-details">EXPERT OBSERVER</p>
<p class="article-details">Westpac expects falling house prices to see a significant ‘wealth effect’ drag on Australian consumer demand this year and next. However, the exact nature and size of this effect remains a major area of uncertainty. What does the latest evidence show?</p>
<div>
<p>For a start, the housing correction is starting to have a clearer impact on the household balance sheet. Latest data shows the total value of dwelling assets fell $270bn over 2018, reflecting both lower prices and slower additions to the dwelling stock. The decline amounts to 40% of a year’s income. Relative to income that is about half the size of the peak to trough falls seen in the GFC and 2011-12 correction.</p>
<p>Recall that the ‘signature’ of a wealth effect drag is a fall in net worth accompanied by a rise in the savings rate, the latter meaning that spending is growing at a slower pace than incomes. Also recall that the shock effect should be confined to states experiencing material price declines (NSW, Victoria and WA).</p>
<p>Westpac compiles estimates of household net worth and savings rates by state based on a range of annual and quarterly benchmarks. These ‘indicative’ estimates show, as expected, considerably larger falls in net worth in NSW and Vic with declines closer to 60% of annual income. They also highlight the extent of the prior run up with net worth in both states still well above 2015 levels.</p>
<p>On savings, the estimates point to declines in NSW and Vic consistent with a wealth effect boost to spending rather than a drag. Any hint of a turn in Q1 will be a key pointer to how this effect may play out.</p>
<p>However even before that there are some clues of a shift coming through in the composition of spending. In a detailed article on wealth effects in its March Bulletin, the RBA set out empirical estimates of the size of this effect noting that the effect appeared to be more pronounced for particular spending categories: namely, vehicles, durables and other discretionary items. A composite measure of growth in ‘wealth sensitive’ items already shows a swing to outright declines in per capita spending. While the weakness still looks to be fairly mild to date it is more pronounced in NSW, Vic and WA.</p>
<p><em><strong>MATTHEW HASSAN</strong> is a Senior Economist for Westpac</em></p>
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The wealth effects, the latest evidence: Westpac's Matthew Hassan

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<p>EXPERT OBSERVER</p>
<p>Falling property values dragging household wealth lower backed up by data from the Australian Bureau of Statistics (ABS) showed that overall household wealth fell over the final two quarters of 2018.</p>
<p>Total household assets were recorded at a value of $12.6 trillion at the end of 2018, while total household assets fell in value over both the September and December 2018 quarters taking household wealth -1.6% lower relative to June 2018.</p>
<p><img src="https://www.urban.com.au/images/2019/4/4/CL%20PP%20Values%201.JPG" alt=""></p>
<p>While the value of household assets fell by -1.6% over the past two quarters, liabilities have increased by 1.5% over the same period to reach $2.4 trillion.</p>
<p>As a result, net household worth was recorded at $10.2 trillion; the lowest it has been since September 2017.</p>
<p>Based on the data from the ABS, the Reserve Bank (RBA) then calculates a number of household finance ratios.</p>
<p>The first metric detailed from the RBA are the ratios of household and housing debt to disposable income.</p>
<p>As at December 2018, household debt was 189.6% of disposable income, a record high and up from 188.7% the previous quarter.</p>
<p>Housing debt was also a record high 140.2% of disposable income and had risen from 139.5% the previous quarter.</p>
<p>While debt levels are quite high, the ratios of asset value to disposable income are much higher.</p>
<p>While that may be the case, it is important to understand that if asset values fall, the value of the debt typically doesn’t reduce at the same speed, which can lead to asset value erosion.</p>
<p><img src="https://www.urban.com.au/images/2019/4/4/CL%20PP%20Values%202.JPG" alt=""></p>
<p>As at December 2018, household assets were 927.9% of disposable incomes.</p>
<p>This ratio has declined as property values have fallen, down from a peak of 962.1% in December 2017.</p>
<p>Similarly, the ratio of housing assets to disposable income is currently 495.3%, down from its peak of 529.7% in December 2017. The 495.3% figure is the lowest it has been since September 2016.</p>
<p>However because of a reduction in the ratio of assets to disposable income, the ratio of debt to assets is climbing.</p>
<p>Total household debt is now 20.4% of household assets, the highest it has been since March 2016.</p>
<p>Total housing debt is 28.3% of total housing assets, the highest it has been since September 2014.</p>
<p>Again, this reflects the fact that asset values are falling as debt increases.</p>
<p><img src="https://www.urban.com.au/images/2019/4/4/CL%20PP%20Values%203.JPG" alt=""></p>
<p>Despite generational low official interest rates, the measures of interest payments to disposable income have risen over recent quarters and likely reflective of lenders lifting interest rates independently of any adjustment to the cash rate by the RBA.</p>
<p>Household interest payments represented 9.1% of household disposable income in December 2018, their highest share since September 2013.</p>
<p>Housing interest payments accounted for 7.6% of household disposable income in December 2018, their highest share since March 2013.</p>
<p>Despite the cash rate tracking at generational lows, households are paying a proportionally higher share of interest than they have in many years.</p>
<p>With housing values falling and expected to keep falling the ratio of assets to disposable incomes is likely to fall over the coming quarters.</p>
<p><img src="https://www.urban.com.au/images/2019/4/4/CL%20PP%20Values%204.JPG" alt=""></p>
<p>Although most households will likely remain in a position whereby the value of their assets is significantly higher than their debt, no doubt an increasing number of recent property purchasers will have higher levels of debt than the value of their asset.</p>
<p>This is probably an area of most concern for the RBA. If this leads to reduced consumer expenditure an in-turn slower economic growth, it may be a trigger for either lower official interest rates or changes to mortgage lending policies (or both).</p>
<p>Furthermore, with household debt at record highs and households dedicating more of their income to servicing their debt at a time when interest rates are so low, and if household debt levels haven’t declined by the time interest rates rise, it could create more challenges for households.</p>
<p>In closing, the ABS/RBA data releases will be very important to focus on over the coming quarters.</p>
<p><em>CAMERON KUSHER is a Research Analyst for CoreLogic</em></p>
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Falling property values drags household wealth lower: Cameron Kusher

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter.</div>
<div> </div>
<div>Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter.</div>
<div> </div>
<div>
<div><strong>What does it all mean?</strong></div>
<div> </div>
<div>The Finance &amp; Wealth publication from the Bureau of Statistics contains the most complete figures on household finances. And for the first time in two years wealth eased slightly. This hardly comes as a surprise – home prices eased in the quarter and the losses weren’t made up elsewhere, such as on the sharemarket.</div>
<div> </div>
<div>On average, each Australian has net assets (assets less liabilities) of just over $410,000, a total that has lifted by over $9,000 in the past year. And over the past five years per capita wealth has lifted by more than $100,000 or 36 per cent. It is clear that household balance sheets remain solid.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph.JPG" alt=""></div>
<div> </div>
<div>Looking ahead home prices are likely to ease further from record levels. The $64 question is whether gains on the sharemarket will offset the reduced valuations of Australian homes. Per capita wealth may consolidate near $400,000 after tremendous gains over the past five years.</div>
</div>
<div>
<div> </div>
<div>Total household wealth (net worth) fell for the first time in two years, down just 0.4 per cent to $10,222.8 billion at the end of March 2018. In per capita terms, wealth eased from a record $414,277 to $410,708 in the March quarter. Wealth is still up $9,072.70 or 2.3 per cent over the year.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%204.JPG" alt=""></div>
<div> </div>
<div>The ABS noted, “Household liabilities outgrew assets during March quarter 2018, resulting in a decrease of 0.4 per cent in household net worth, falling from a 2.0 per cent rise last quarter. Household liabilities was the largest contributor to the decrease in household net worth, detracting 0.3 percentage points, followed by land and dwellings assets detracting 0.2 percentage points.</div>
<div> </div>
<div>Households held a record $1,105.7 billion in cash and deposits at the end of March. Cash and deposit holdings represented 21.65 per cent of financial assets, down from 21.71 per cent in the December quarter but still just above the post global financial crisis (GFC) average of 21.16 per cent and the long-term average of 16.3 per cent.</div>
<div> </div>
<div>Households held a record $939.3 billion in shares or 18.6 per cent of all financial assets, in line with the average since the global financial crisis.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%208.JPG" alt=""></div>
<div> </div>
<div>Pension fund (superannuation fund) assets fell by $9.9 billion to $2,174.5 billion in the March quarter. Cash and deposits stood at 11.3 per cent of financial assets, below the 13.5 per cent average since the global financial crisis, but above the long-term average of 9.4 per cent.</div>
<div> </div>
<div>Foreigners held $557.4 billion of Aussie shares in the March quarter, down from $582.5 billion in the December quarter. Foreigners held 30.5 per cent of total listed shares (long-term average 32.9 per cent).</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%205.JPG" alt=""></div>
<div> </div>
<div>
<div><strong>What is the importance of the economic data?</strong></div>
<div><strong> </strong></div>
<div>The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.</div>
<div> </div>
<div><img src="https://www.urban.com.au/images/2018/6/29/CJ%20Graph%207.JPG" alt=""></div>
<div> </div>
<div>
<div><strong>What are the implications for interest rates and investors?</strong></div>
<div><strong> </strong></div>
<div>With wages tracking closely in line with prices and wealth now easing, there will be continued uncertainty about future spending by Australian families. In other words, just another reason to leave cash rates on hold.</div>
<div> </div>
<div>
<div>CommSec expects official rates to remain stable until early 2019.</div>
<p><em>Craig James is chief economist at CommSec.</em></p>
</div>
</div>
</div>
</div>
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Household wealth now falling: Commsec's Craig James

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<h1>Three charts on: the great Australian wealth gap</h1>
<p>Young Australians still remain locked out of the housing market as the wealth disparity grows across generations. <span><a href="https://theconversation.com/profiles/trent-wiltshire-316914"><br></a></span></p>
<p>It’s a tale of two Australias: older Australians are getting much wealthier, and the young are being left behind.</p>
<p>It’s a story only too familiar to Australians under 45 who have struggled to save enough money to access the housing market in Australian cities. They are a generation for whom the great Australian dream of home ownership has become largely elusive.</p>
<p><a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6523.0Main+Features12015-16?OpenDocument" target="_blank">Data</a> from the Australian Bureau of Statistics (ABS) shows that older Australians are capturing an increasing share of the nation’s wealth, and the house-price boom is a major cause of the growing divide between the generations.</p>
<p>As you can see in the following chart, households headed by 65-74-year-olds were on average A$480,000 wealthier in 2015-16 than households in the same age group 12 years ago. And that’s after taking inflation into account and despite the damage caused by the global financial crisis. Households headed by 45-54-year-olds are A$400,000 richer.</p>
<p>In contrast, households headed by 35-44-year-olds are on average only A$120,000 wealthier – and for 25-34-year-olds the figure is just A$40,000.</p>
<p><iframe style="border: none;" src="https://datawrapper.dwcdn.net/A0XEq/3/" frameborder="0" width="100%" height="400"></iframe></p>
<h2>Property is a key factor for wealth disparity</h2>
<p>Soaring property prices are a major factor behind the rapidly growing wealth of older Australians. According to the <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/6416.0Main+Features1Jun%202017?OpenDocument">ABS</a>, house prices grew by 37% on average across all the capital cities between 2003-04 and 2015-16 (and by more than 50% in Melbourne alone). The boom was not limited to the capitals; prices also grew strongly in <a href="https://www.corelogic.com.au/reports/CL_Housing-Affordability-Dec_2016.pdf">regional areas</a>.</p>
<p>The next chart shows that for households headed by someone aged 75 or over, greater property wealth contributed about three-quarters of the increase in their total net wealth. For households headed by 65-74-year-olds and 55-64-year-olds, property contributed about half of the total increase in wealth.</p>
<p>But for younger Australians, again it is a different story.</p>
<p>Bigger mortgages largely offset the increase in property wealth for households headed by 25-34-year-olds and 35-44-year-olds. Baby Boomers have also used the superannuation system to build their wealth. They took advantage of the <a href="https://grattan.edu.au/wp-content/uploads/2015/11/832-Super-tax-targeting.pdf" target="_blank">generous super tax breaks</a> on offer for people nearing retirement, such as the ability to put large, concessionally taxed sums into their super funds just before retirement.</p>
<p>Average superannuation wealth over the same 12-year period increased by A$230,000 in real terms for households headed by 65-74-year-olds, and by more than A$150,000 for households headed by 55-64-year-olds. Strong <a href="https://au.investing.com/indices/s-p-asx-200-net-total-return-historical-data" target="_blank">share market returns</a> have further boosted superannuation balances and other financial wealth.</p>
<p><iframe style="border: none;" src="https://datawrapper.dwcdn.net/OX09s/6/" frameborder="0" width="100%" height="400"></iframe></p>
<h2>Young people locked out</h2>
<p>As property prices have boomed, more young Australians have been locked out of home ownership.</p>
<p>As this last chart shows, home ownership rates among households headed by 25-34-year-olds fell between 1981 and 2016, from more than 60% to 45%. For households headed by 35-44-year-olds the fall was from 75% to around 62%. Home ownership rates are also falling for households headed by 45-54-year-olds.</p>
<p>Some of these falls are also partly the result of social changes: Australians are waiting until later in life before starting work, forming long-term partnerships, and having children. But most Australians still <em>want</em> to own a home, so it is reasonable to conclude that higher property prices are the <a href="https://www.rba.gov.au/publications/rdp/2017/2017-05" target="_blank">biggest cause</a> of lower ownership rates.</p>
<p>Two-thirds of 25-34-year-olds responding to a 2017 <a href="https://politicsir.cass.anu.edu.au/sites/politicsir.anu.edu.au/files/ANUpoll-24-Housing-2017.pdf" target="_blank">Australian National University survey</a> thought owning a home was an important “part of the Australian way of life”, and more than half were “very concerned” that younger generations won’t be able to afford a house.</p>
<p><iframe style="border: none;" src="https://datawrapper.dwcdn.net/lOpWw/6/" frameborder="0" width="100%" height="400"></iframe></p>
<h2>The bank of mum and dad</h2>
<p>The wealth divide between generations can easily lead to a more profound divide within generations. For many younger people, the only way that they can afford to buy a house is with help from “the bank of mum and dad”.</p>
<p>As house prices have increased, <a href="https://www.rba.gov.au/speeches/2017/sp-ag-2017-02-16" target="_blank">more first home buyers are receiving assistance</a> from family and friends to enter the property market. The strong growth in the wealth of today’s older generations, combined with the steady shrinking of the family size from 1960 to 2000, will lead to more and larger inheritances.</p>
<p>Inheritances tend to transmit wealth to children who are <a href="https://grattan.edu.au/report/the-wealth-of-generations/" target="_blank">already well-off</a>, and home ownership is more likely among those who receive an inheritance, and more likely still among those who receive larger inheritances.</p>
<p><img src="https://counter.theconversation.com/content/84515/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Australia is becoming wealthier, but much of the increase is concentrated in the hands of older generations. The trend is unmistakable: unless something changes, the young will fall further behind and inequality will get worse.</p>
<p><span><a href="https://theconversation.com/profiles/trent-wiltshire-316914" target="_blank">Trent Wiltshire</a>, Associate, <em><a href="https://theconversation.com/institutions/grattan-institute-1168" target="_blank">Grattan Institute</a></em> and <a href="https://theconversation.com/profiles/danielle-wood-147710" target="_blank">Danielle Wood</a>, Fellow, Australian Perspectives, <em><a href="https://theconversation.com/institutions/grattan-institute-1168" target="_blank">Grattan Institute</a></em></span></p>
<p>This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/three-charts-on-the-great-australian-wealth-gap-84515" target="_blank">original article</a>.</p>
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The great Australian wealth gap

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<div class="section">
<div class="layoutArea">
<div class="column">GUEST OBSERVER</div>
<div class="column"> </div>
<div class="column">Total household wealth (net worth) stood at a record $9,404.5 billion at the end of December 2016, up $328.1 billion or 3.5 percent over the quarter – marking the largest quarterly increase in net wealth in seven years.</div>
<div class="column"> </div>
<div class="column">In per capita terms. CommSec estimates that wealth rose to a record $386,972 in the December quarter, up $12,227 over the quarter and up around $24,000 over the year.</div>
<div class="column">
<br>Households held a record $1,046 billion in cash and deposits at the end of December. Cash and deposit holdings represented 22.4 per cent of financial assets. A record $798.2 billion was held in shares.</div>
<div class="column">
<br>Foreigners held a record $792.2 billion of Aussie shares in the December quarter or 45.1 per cent of the total.</div>
<div class="column">
<br>Job vacancies: Job vacancies rose by 1.8 per cent to 185,600 in the three months to February – a 6-year high. Job vacancies are up 7.3 per cent on a year ago.</div>
<div class="column"> </div>
<div class="column">New home sales: New home sales rose by 0.2 per cent in February. </div>
<div class="column"> </div>
<div class="column"><a href="https://www.propertyobserver.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.24.38%20AM.png" target="_blank">Click to enlarge</a></div>
<div class="column"><img src="https://www.urban.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.24.38%20AM.png" alt=""></div>
<div class="column"> </div>
<div class="column">What does it all mean?</div>
<div class="column">
<div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column"> </div>
<div class="column">Bad news for the gloom &amp; doomsters – new data confirms that Australians have never been wealthier. While loans rose by 1.6 per cent in the December quarter, yet again this was exceeded by growth of financial assets. And on top of this, the value of homes soared by 4.5 per cent.</div>
<div class="column"> </div>
<div class="column">In simple terms, debt may be up, but it is being used to purchase assets that are growing at a faster rate – not just homes but shares and other financial assets. Over the past two years financial assets have grown by $652 billion, well ahead of the $246 billion lift in loans. It is a point worth stressing to put more reason into the debate on household debt.</div>
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<br>But conservatism still reigns. The proportion of all financial assets in the economy held in cash and bank deposits has lifted to a 4-year high. In the December quarter over a fifth of all financial assets – 21.4 per cent – was held in cash and bank deposits. Aussie consumers, businesses and pension funds are all holding more than the “normal” proportion of financial assets in cash – especially companies and super funds.
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<div class="column">Foreign investors are still quite happy to hold Aussie shares. In fact foreigners now hold a record $765.6 billion of listed shares or just over 45 per cent of the total. In short, no worries about our economy from abroad.</div>
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<div class="column">The number of job vacancies has surged in the nine months to February and vacancies are now holding near 6-year highs. With more optimism on the global economy, business is shifting its focus to growth, investment and profitability. The lift in job vacancies certainly bodes well for hiring in coming months. Overall it is pretty clear that the job market remains in good shape.</div>
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<div class="column">Last year most of the jobs created were in part-time roles, with employers hiring more part timers and managing their workforce more carefully. The result was understandable given the degree of uncertainty that was prevalent with the Federal Budget, timing of an early election, and Brexit. However throughout the latter part of the year, employers started to add more full-timers. Stronger profitability and a focus on growth should give employers a degree of comfort to add full-time and permanent staff to the roster over 2017.<br><p><a href="https://www.propertyobserver.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.25.50%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="https://www.urban.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.25.50%20AM.png" alt=""></p>
<p>Interestingly there are around 13,000 more vacancies than at the same time in 2016. The jobs being created are primarily in the services sector, with healthcare and admin roles leading the gains. These jobs tend to be spread over a raft of small and medium-sized businesses as well as large firms, so generally don’t attract the same degree of media attention as jobs lost in mining. Importantly the lift in commodity prices should support the resources sector. In fact the latest figures suggest that the number of jobs across the mining sector has bottomed and now lifting – albeit incrementally.</p>
<p>What do the figures show?</p>
<p>Financial Accounts:</p>
Total household wealth (net worth) stood at a record $9,404.5 billion at the end of December 2016, up $328.1 billion or 3.5 per cent over the quarter – marking the largest quarterly increase in net wealth in seven years. In per capita terms. CommSec estimates that wealth rose to a record $386,972 in the December quarter, up $12,227 over the quarter.</div>
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<br>In real terms, the value of land and dwellings rose by $217 billion in the December quarter, while the value of financial assets rose by $29.3 billion. Net saving plus real wealth rose by $274.5 billion in the quarter.</div>
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<br>Household financial liabilities fell by $8.6 billion in the December quarter in real terms.</div>
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<div class="column">Households held a record $1,046 billion in cash and deposits at the end of December. Cash and deposit holdings represented 22.4 per cent of financial assets, up from 22.3 per cent in the September quarter and in line with the long-term average of 22.2 per cent.</div>
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<div class="column">Households held a record $798.2 billion in shares or 18.5 per cent of all financial assets, and above the 17.7 per cent average since the global financial crisis.</div>
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<div class="column">Pension fund (superannuation fund) assets rose by $52.7 billion to $2,013.1 billion in the December quarter. Cash and deposits stood at 14.8 per cent of financial assets, in line with the 14.8 per cent average since the global financial crisis but well above the long-term average of 9.7 per cent.</div>
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<p><span></span><span>Foreigners held a record $792.2 billion of Aussie shares </span><span>in the December quarter or 45.1 per cent of the total (long-term average 42.7 per cent). Share of bond holdings by foreigners rose from a 14-year low of 47.7 per cent in the September quarter to 47.8 per cent in the December quarter.</span></p>
<p><a href="https://www.propertyobserver.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.27.00%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="https://www.urban.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.27.00%20AM.png" alt=""></span></p>
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<p><span>Job vacancies: </span></p>
Job vacancies rose by 1.8 per cent to 185,600 in the three months to February – a near 6-year high. Job vacancies are up 7.3 per cent on a year ago.</div>
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<div class="column">In original terms, annual changes in vacancies across states and territories were: NSW (down 0.7 per cent); Victoria (up 10.5 per cent); Queensland (down 12.2 per cent); South Australia (down 2.3 per cent); Western Australia (up 0.7 per cent); Tasmania (up 32.9 per cent); Northern Territory (up 7.3 per cent) and ACT (up 5.9 per cent).<br><p>Vacancies rose 13,100 in original terms over the year. In terms of industries, vacancies rose the most over the year in Health Care &amp; Social Assistance (up 4,700), Other Services (up 3,000), Administrative &amp; Support services (up 2,900) and Professional, Scientific and Technical Services (up 1,900). Vacancies fell most in Retail trade (down 3,300), Accommodation &amp; Food services (down 1,400), and Rental, Hiring and Real Estate Services (down 800).</p>
<p>New home sales</p>
In seasonally-adjusted terms, new home sales rose by just 0.2 per cent in February. The number of detached house sales fell by 0.1 per cent while multi-unit dwelling sales lifted by 1 per cent.<br><p>The Housing Industry Association reported: “Detached house sales increased in two out of five mainland states in February 2017 - Western Australia and Victoria. Detached house sales in WA increased by 11.3 per cent in February 2017 following a rise of 12.1 per cent in January. Note that these rates of growth are exaggerated by the extremely low base for detached house sales. Detached house sales in Victoria posted a monthly gain of 5.1 per cent in February. Elsewhere for the mainland states, in February detached house sales fell by 12.6 per cent in New South Wales and were down by 5.7 per cent in Queensland and 0.2 per cent in South Australia.”</p>
<p>What is the importance of the economic data?</p>
The Australian Bureau of Statistics releases the Financial Accounts publication each quarter. The data covers assets, liabilities and financial flows for the key sectors of the economy. Figures on financial wealth help reveal the true state of household finances.</div>
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<br>The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.</div>
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<br>The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia's largest 100 home builders. The survey covers around 14 per cent of the home building industry. </div>
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<div class="column"><a href="https://www.propertyobserver.com.au/images/2017/03/31/Screen%20Shot%202017-03-31%20at%208.28.05%20AM.png" target="_blank">Click to enlarge</a></div>
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<p><span>What are the implications for interest rates and investors? </span></p>
Record household wealth will continue to support spending. And it is clear that household balance sheets remain in very good shape. While the gloomsters focus on higher household debt, the simple fact is that money is being used to buy assets, assets that are providing better returns than the cost of the loans being taken out. Aussies aren’t borrowing in droves to buy luxury cars – although some indeed are. No, the majority are investing in shares, putting money to work in superannuation and investing in property.</div>
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<br>There is always a risk that asset values can fall as well as rise. But Aussies are well placed to deal with that situation should it eventuate.</div>
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<br>A number of retailers have noted that the ‘wealth effect’ has been positive for their sales – areas like furniture, cars, boats and electrical equipment. </div>
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<div class="column"><em>Savanth Sebastian is an economist for <a href="https://www.commsec.com.au/" target="_blank">CommSec</a></em></div>
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Job vacancies at 6-year highs: Savanth Sebastian

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<p><img src="https://counter.theconversation.edu.au/content/64297/count.gif" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>There is little justification in giving rich households generous superannuation tax concessions, as wealth has a limited impact on spending and wellbeing in retirement new research suggests.</p>
<p>Retirement income is at the core of the controversy around the federal government’s proposed changes to superannuation and yet very little is known about how retirees actually spend their money.</p>
<p>Our research found that, despite the large variation in the income levels of households, wealthier households spend at a similar level to those with more modest wealth.</p>
<p>Retiree couples aged 65-74 spent just $33,200 a year on average, while single households of the same age spent an average of only $18,400 in 2014.</p>
<p>These figures fall below the benchmarks set by the Association of Superannuation Funds of Australia (ASFA), which suggests a couple needs $33,784 a year to afford a “modest” lifestyle, and 20 percent lower than the $23,489 figure it benchmarked for single households in 2014.</p>
<p>In March, the federal government adopted the thinking from the Financial Systems Inquiry that superannuation’s objective was to provide income in retirement to substitute or supplement the Age Pension. But Treasurer Scott Morrison remains under pressure not to go through with plans to limit lifetime non-concessional superannuation contributions to $500,000.</p>
<p>The government appears committed to other super reforms aimed at dismantling super concessions for the wealthy, announced in its May budget.</p>
<p>At present retirement income needs are estimated either as a proportion of income during the working life or by using income “standards” (such as those used by ASFA) which estimate the income needed to attain a given quality of life.</p>
<p>Our analysis, using data from the most recent Household, Income and Labour Dynamics in Australia (HILDA) survey, shows spending levels are largely driven by cost-of-living pressures such as geographical location (with spending highest in Sydney and lowest in regional South Australia). Household structure and home ownership are also important.</p>
<p>It’s likely that the wealthiest households are indeed “saving” – either deliberately to ensure they can pass on their wealth to the next generation, or to self-insure against possible future aged-care and health expenses – particularly if they own their home outright.</p>
<p>In comparison, retirees who are in the rental market spent on average $11,500 on rent – almost 40 percent of their total annual expenditure. This points to a need for a real focus on the plight of retirees exposed to the rental market, particularly single-person households.</p>
<p>With a large bulk of their spending swallowed up by rent, these households appear to struggle to afford basic household items. Our analysis showed households that rely on the Age Pension as their major source of income had much lower relative spending on health care and insurance – $1,900 annually, compared to $4,300 for self-funded retirees.</p>
<p>Single-person households also struggled, with almost 80 percent of households unable to reach even a modest standard of living.</p>
<p>For these households, increases in welfare payments or housing assistance will likely have a greater impact on well-being than raising the current 9.5 percent Superannuation Guarantee to 12 percent.</p>
<p>On the positive side, we found that superannuation already provides a valuable source of income for younger retirees – around one-fifth of annual income for those aged 65-74. Superannuation wealth has grown enormously over the past decade. In 2014, households aged 65-74 had superannuation assets 190 percent higher (in real terms) than their counterparts in 2002.</p>
<p>And this huge growth in superannuation and household wealth has coincided with increases in household spending, with current retirees spending more than previous cohorts.</p>
<p>Further growth of the superannuation system through greater participation and the rising Superannuation Guarantee will likely see the wealth of retirees continue to grow. But until there is a clearer picture of superannuation wealth and retirement income, it will be hard to ensure superannuation reforms deliver on their objective.</p>
<p><em><span class="fn author-name">Eliana Maddock is r</span>esearch officer, Australian Centre for Financial Studies and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/eliana-maddock-293619" target="_blank">here</a>.</em></p>
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