<p>A full-scale Sky Homes prototype apartment for <a href="https://www.apartments.com.au/new-apartments/zeste-at-the-orchards-norwest-104-fairway-drive-norwest-nsw-2153">Zeste</a> has been opened by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a>, offering buyers a look at the final residential release within The Orchards masterplan in <a href="https://www.apartments.com.au/developments/norwest-nsw-2153">Norwest</a>.</p>

<p>The prototype launch coincides with buyer demand for larger apartment living continuing across Sydney’s Hills District.</p>

<p>David Lee, Sales Manager, Apartment &amp; Mixed-Use Developments at Sekisui House Australia said it was evident from the preceding four stages at The Orchards that a large number of buyers were local owner occupiers or downsizers specifically looking for oversized apartments with additional living spaces.</p>

<p>“The majority of buyers prefer to touch, feel and physically sight a full-scale completed apartment, rather than imagining the living spaces from floor plans," Lee says.</p>

<p>"The prototype apartment provides greater clarity and buyer confidence. We expect this will increase sales momentum for Zeste and the Sky Homes in particular.”</p>

<p>[smartcode_project:default project_id=150510 project_image_fid=351878]</p>

<p>Positioned within Stage 5’s Zeste project, the Sky Homes form part of the final opportunity to purchase within the award-winning master-planned community, which will ultimately deliver approximately 1,300 apartments.</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>, Zeste comprises two residential buildings, Essence and Eden, providing 209 apartments surrounded by extensive landscaping, resort-style amenities and community spaces.</p>

<p>Ben Pomroy, Principal at Rothelowman said Zeste explores a reinvention of the traditional house, in the orchard, synthesising the nostalgic story of the orchard homestead of yesteryear with a contemporary aesthetic inspired by the landscape.</p>

<p>“Natural light and ventilation are key to the design, contributing to a higher quality of life at the human scale. Across all Rothelowman projects, our ethos of ‘a generous eye for life’ drives our consideration of the human experience as the central point of focus of our design process.”</p>

<p>Pomroy says a&nbsp;notable design element is the cathedral glass light boxes incorporated in the joinery, inspired by the idea of wandering the orchard homestead with a lantern in hand, something familiar and nostalgic.</p>

<p>"We took this narrative and gave it a contemporary twist that is both beautiful and functional, creating unique features that unify the kitchen and bathrooms design.”</p>

<p>[smartcode_project:default project_id=150510 project_image_fid=351874]</p>

<p>In addition to the two residential buildings, Zeste comprises a single-story community amenity pavilion nestled in the landscape between Essence and Eden.</p>

<p>“The communal pavilion is a distinctive feature designed to foster a deep sense of community, with nature at its heart," Pomroy added.</p>

<p>"Whether it is watching the football grand final or hosting a family BBQ, the pavilion is designed as a place where residents can create memorable moments with friends, family and neighbours.</p>

<p>Since launching Essence, the first building within Zeste, buyer demand has remained strong with more than 30 per cent of residences already sold. Sky Homes have accounted for nearly 40 per cent of all sales achieved since launch.</p>

<p>“Purchasers are responding positively to the oversized layouts, diverse apartment configurations and the vast range of community facilities that will be available at completion,”David Lee noted.</p>

<p>Zeste Sky Homes represent approximately 35 per cent of the entire Stage 5 offering and are available across both Essence and the yet-to-launch Eden building. Prices for the Sky Homes range from $1,135,000 with one car space through to $1,500,000 for two car spaces.</p>

<p>Apartments across the broader Zeste release start from approximately $715,000, with generous floorplans ranging from 59 to 144sqm. Select residences also feature integrated ‘Max’ spaces, designed to function as flexible areas for home offices, children’s playrooms or additional storage.</p>

<p>Zeste also continues Sekisui House Australia’s sustainability partnership with Altogether Group, delivering integrated water, power and data services alongside passive design initiatives including cross-ventilation, landscaping and water features.</p>

<p>Early purchasers are currently able to access a selection of premium upgrade options, with VIP buyers receiving one complimentary upgrade package. A 2.5 per cent deposit is available for a short time.</p>

<p>Sekisui recently commenced its pre-construction phase. They are expecting an early 2028 completion of Zeste.</p>

<p>[smartcode_project_cta:default project_id=150510]</p>


Joel Robinson

Zeste Sky Homes prototype opens as buyer demand surges for oversized apartment living

<p>Having recently announced its entry into the booming Gold Coast new apartment market with <a href="https://www.apartments.com.au/new-apartments/aere-chevron-island-18-20-mawarra-street-surfers-paradise-qld-4217">Aere Chevron Island</a>, developer Martello™ is offering generous stamp duty savings for buyers before June 30.</p>

<p>Martello™ says the incentive creates a more accessible entry into premium apartment living.</p>

<p>"While incentives in property are nothing new, today’s stamp duty contributions arrive at a particularly important moment," the developer says.</p>

<p>"Buyers are not only seeking quality homes and strong locations; they are also looking for smarter financial entry points. Reducing or offsetting stamp duty can represent tens of thousands of dollars in savings - funds that can instead be directed toward furnishing a home, reducing mortgage pressure, or simply providing peace of mind during the transition into ownership."</p>

<p>[smartcode_project:default project_id=143932 project_image_fid=367517]</p>

<p>Aere is one of the more boutique new developments on Chevron Island, with just 33 apartments across 18 storeys on Mawarra Street</p>

<p data-end="695" data-start="463">The developer has placed a strong emphasis on wellness, briefing architecture firm Raunik Design to embed this philosophy into the project.</p>

<p data-end="1094" data-start="697"><a href="https://www.apartments.com.au/developers/martello">Martello™</a>&nbsp;has positioned Aere as a continuation of its human-centric development approach, with a focus extending beyond amenity to the fundamentals of layout, natural light, and spatial planning.</p>

<p data-end="1094" data-start="697">[smartcode_project:default project_id=143932 project_image_fid=368446]</p>

<p data-end="1094" data-start="697">To bring a heightened level of confidence to the project, <a href="https://www.apartments.com.au/developers/martello">Martello™</a>&nbsp;has already appointed Promax Construction to build the tower. They are expected to start construction in the coming months.</p>

<p>Martello™ says that in any market cycle, confidence matters.</p>

<p>"Buyers who may have been waiting on the sidelines are now reassessing their timing as developers and vendors introduce meaningful incentives designed to support decision-making. For owner-occupiers, it creates an opportunity to secure a premium residence with reduced upfront costs. For investors, it can improve the overall acquisition equation at a time when rental demand remains exceptionally strong across many key markets."</p>

<p>&nbsp;</p>

<p>[smartcode_project:default project_id=143932 project_image_fid=367507]</p>

<p>Aere offers a mix of two-, three-, and four-bedroom apartments, the latter of which occupy half a flor. These layouts prioritise separation between living and sleeping zones, along with increased privacy and storage, features more commonly associated with detached housing than traditional apartment product.</p>

<p data-end="2059" data-start="1790">Aere’s private resident amenity spaces centre on wellness. A rooftop level will incorporate a heated swimming pool, sauna and spa, alongside a residents’ lounge, dining areas and barbecue spaces, while additional shared facilities throughout the building include a gym and yoga area.</p>

<p>[smartcode_project:default project_id=143932 project_image_fid=367515]</p>

<p>&nbsp;</p>

<p>"What we are seeing now is a market that rewards readiness," Martello added.</p>

<p>"Buyers who are informed, financially prepared, and willing to act decisively are finding opportunities that may not exist once conditions shift again. Incentives such as stamp duty contributions are typically limited in duration and allocation, particularly within tightly held developments where demand remains high.</p>

<p>&nbsp;</p>

<p><em>Offer available on selected residences at Aere Chevron Island only. Stamp duty contribution provided by the developer at settlement and cannot be exchanged for cash or combined with any other offer unless approved by the developer. Offer valid for contracts signed on or before 30 June 2026. The developer reserves the right to amend or withdraw the offer at any time without notice. Terms and conditions apply.</em></p>

<p><em>[smartcode_project_cta:default project_id=143932]</em></p>


Martello™ offers limited time stamp duty concessions at Aere Chevron Island

<p data-end="200" data-start="0">New development specialists Lachlan Cottee and Ben Dalgleish have unveiled their new development firm, Dalcott, following several successful projects delivered under the Pyco banner across the region.</p>

<p data-end="376" data-start="202">Pyco is currently delivering Atelier in nearby West End, Nouveau in Albion, and Onde at Kirra, its debut Gold Coast apartment development in the booming Kirra Beach precinct.</p>

<p data-end="583" data-is-last-node="" data-is-only-node="" data-start="378">Its first plans under the new Dalcott banner are in South Brisbane, which has been Brisbane’s most enquired-on suburb so far in 2026, while neighbouring West End has also continued to record strong demand.</p>

<p data-end="1091" data-start="626">The developer already has approval for an 11-storey building with 65 apartments on Browning Street, however has recently acquired the adjoining 910 sqm site at the rear, creating a combined 2,746 sqm footprint that will now allow for two 11-storey buildings with 92 large-scale apartments, a configuration Cottee and Dalgleish have focused on across their local portfolio.</p>

<p data-end="1244" data-start="1093">The project, known as <a href="https://www.apartments.com.au/new-apartments/marrone-south-brisbane-39-browning-street-south-brisbane-qld-4101">Marrone</a>, will comprise 84 three-bedroom apartments, 16 of which will include an additional multipurpose room, and just eight two-bedroom residences.</p>

<p data-end="1383" data-start="1246">DAH Architecture has led the design of Marrone, which will include more than 330 sqm of communal open space and rooftop recreation areas.</p>

<p data-end="1383" data-start="1246"><img alt="Marrone" data-entity-type="file" data-entity-uuid="7eeea1a0-be23-47c8-80fb-3409428241fd" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-21%20at%209.36.38%E2%80%AFAM.png?VersionId=pZW7o.tB7oJovYCRIFSxrZbMr6QdpHy." /></p>

<p data-end="1473" data-start="1385">Cottee told Apartments.com.au the project reflects a gap in Brisbane’s apartment market.</p>

<p data-end="1571" data-start="1475">"It is an area we know well with Atelier, another development which focuses on large apartments, less than 300 metres away," Cottee says.</p>

<p data-end="1824" data-start="1573">"There's limited supply of large-scale apartments of this size in a single building in Brisbane. The majority of apartments in this category are in considerably smaller buildings, on the water, and are only really accessible to the deepest of pockets.</p>

<p data-end="1953" data-start="1826">"Marrone will offer the same size and scale, but with greater amenity and at a much more realistic price point for the market."</p>

<p data-end="2256" data-start="1955">The architectural approach reflects the continued evolution of South Brisbane’s higher-density residential character. Renders show a heavily landscaped façade composition with curved balconies, textured brickwork, deep recesses, and integrated planting aimed at softening the scale of the twin towers.</p>

<p data-end="2486" data-start="2258">The revised proposal builds on the design narrative established in the original scheme. In the earlier submission, Gatehouse Architects described the project as a continuation of Browning Street’s long-term urban transformation.</p>

<p data-end="2691" data-start="2488">“The proposal echoes the spirit of early developments like Watson Terrace (built in 1888), by contributing to the growth and diversification of the local population,” the original design statement noted.</p>

<p data-end="2918" data-start="2693">“Just as Watson Terrace played a role in the area’s early gentrification, this development continues that trajectory, delivering contemporary housing that addresses the evolving needs of South Brisbane’s expanding community.”</p>

<p data-end="3297" data-start="3024">The updated proposal, designed by DAH Architecture, spans a 2,746 sqm corner site with frontages to Browning and O’Connell Streets. The development will comprise two 11-storey residential buildings delivering 92 apartments, replacing the previously proposed 65-unit scheme.</p>

<p data-end="3673" data-start="3299">The apartment mix has shifted further toward larger owner-occupier residences, continuing Dalcott’s established strategy across South East Queensland. The plans include 68 three-bedroom apartments, 16 three-bedroom apartments with multipurpose rooms, and eight two-bedroom residences. Two basement levels will provide 142 car spaces, alongside bicycle parking for 115 bikes.</p>

<p data-end="3950" data-start="3675">The larger Marrone proposal arrives amid sustained redevelopment momentum across South Brisbane and the wider Kurilpa precinct, where developers are increasingly targeting owner-occupiers seeking larger apartments close to the CBD, cultural precincts, and riverfront amenity.</p>

<p data-end="4211" data-start="3952">The site sits within walking distance of South Bank, the Queensland Performing Arts Centre, Brisbane State High School, and several major transport connections, while nearby Fish Lane and West End continue to drive demand for higher-end inner-city apartments.</p>

<p data-end="4458" data-is-last-node="" data-is-only-node="" data-start="4213">Cottee is expecting Marrone to launch around August with Realm Projects.</p>


Exclusive: Dalcott doubles down on South Brisbane with twin-tower Marrone plans

<section data-scroll-anchor="false" data-testid="conversation-turn-2" data-turn="assistant" data-turn-id="request-WEB:9894702f-d5ab-4186-930d-8f794421c3c4-0" data-turn-id-container="request-WEB:9894702f-d5ab-4186-930d-8f794421c3c4-0" dir="auto">
<p data-end="437" data-start="182"><a href="https://www.apartments.com.au/developers/doma-group">DOMA Group</a> has unveiled plans for Newcastle Quay, a major waterfront precinct set to reshape Newcastle’s harbourfront and further cement the city’s evolution into one of Australia’s fastest-growing urban destinations.</p>

<p data-end="707" data-start="439">Positioned on a prominent site within the Honeysuckle Precinct, Newcastle Quay will span both sides of Honeysuckle Drive, connecting directly to the Foreshore Promenade and sitting within walking distance of Newcastle Interchange.</p>

<p data-end="1068" data-start="709">The mixed-use precinct is planned to include around 1,000 apartments, more than 28,000 sqm of commercial office space, 6,000 sqm of retail, and a 180-room hotel anchored by a 500-seat conference and exhibition centre, a move expected to significantly lift Newcastle’s ability to attract major business and tourism events.</p>
</section>

<p><img alt="DOMA Group unveil Newcastle’s future with transformative Newcastle Quay Precinct" data-entity-type="file" data-entity-uuid="0642ca09-67cc-4920-8a7e-d18df9729b4e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/%3D.png?VersionId=CnDmZxQnOV5LN0ePu7jaFBXC9tPGTrWm" /></p>

<p data-end="1381" data-start="1070">The proposal builds on DOMA’s growing Newcastle pipeline, where the developer has already delivered 866 apartments and more than 19,000 sqm of commercial and retail space since entering the market in 2013. A further $2 billion pipeline is also in the works across the city.</p>

<p data-end="1756" data-start="1383">The masterplan and executive architecture are led by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, with building concepts developed alongside Stewart Architecture, Architecture AND and Curious Practice, and landscape design by <a href="https://www.apartments.com.au/landscape-architect/turf-design">Turf Design Studio</a>. More than 11,000 sqm of open space is planned, including a new waterfront park known as Honeysuckle Green, upgrades to Tree of Knowledge Park, and new pedestrian and cycling links throughout the precinct.</p>

<p data-end="2022" data-start="1758">At the centre of the development will be the heritage-listed Wickham School of Arts, which DOMA plans to reposition as the civic and cultural heart of the precinct through restaurants, bars, events and public gathering spaces.</p>

<p data-end="2254" data-start="2024">The broader vision is to create a genuine day-to-night precinct, blending residential, hospitality, retail, commercial and cultural uses in a way Newcastle has yet to experience at this scale.</p>

<p data-end="2407" data-start="2256">DOMA Group Managing Director Jure Domazet said the aim was to create a precinct that becomes synonymous with Newcastle itself.</p>

<p data-end="2644" data-start="2409">“Our vision is to create a precinct that not only delivers high-quality commercial, residential, and cultural spaces, but also defines Newcastle’s waterfront for generations to come,” Domazet said.</p>

<p data-end="2752" data-start="2646">DOMA’s Chris Farrington said the project would fundamentally change how Newcastle is perceived nationally.</p>

<p data-end="2868" data-start="2754">“Newcastle Quay is more than a waterfront precinct, it is a national announcement for this city,” Farrington said.</p>

<p data-end="3111" data-start="2870">“A world-class Conference and Exhibition Centre will open Newcastle and the Hunter Region to a national and international audience for the first time, delivering something this city has long deserved.”</p>

<p data-end="3360" data-is-last-node="" data-is-only-node="" data-start="3113">The project is expected to generate more than 4,000 full-time equivalent jobs and act as a major economic driver for the Hunter region through tourism, business events, hospitality and commercial investment.</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Minister for Planning and Public Spaces Paul Scully said the final parcel of harbourfront land will be a "true mixed-use precinct destination that includes housing, hospitality and entertainment, commercial spaces, retail, economic and social outcomes."</p>


DOMA Group unveils 1,000-apartment Newcastle Quay precinct

<p data-end="262" data-start="143">ASX-listed developer Stockland is continuing to ramp up its return to the apartment market.</p>

<p data-end="451" data-start="264">In late 2024, <a href="https://www.apartments.com.au/developers/stockland">Stockland</a> announced it would resume apartment development after a 13-year absence, launching with Stanton Place in Rosebery, a 144-apartment project now under construction.</p>

<p data-end="560" data-start="453">Last week, the developer unveiled plans alongside the NSW Government for a <a href="https://www.apartments.com.au/news/nsw/first-look-stockland-nsw-gov-unveils-plans-for-3-300-home-waterloo-south-renewal">3,300-home precinct in Waterloo</a>.</p>

<p data-end="797" data-is-last-node="" data-is-only-node="" data-start="562">Now, Stockland has shifted its focus in St Leonards, lodging a State Significant Development Application (SSDA) to replace an approved 42-storey office tower with a 52-storey residential development comprising more than 500 apartments.</p>

<p><img alt="Stockland" data-entity-type="file" data-entity-uuid="8979095e-9072-432b-a7da-58b180cf994d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-20%20at%204.27.36%E2%80%AFPM.png?VersionId=_jbRXYOafCSHjwsz.yQCNIymMyCj8zkF" /></p>

<p>An existing 14-storey commercial office building would make way for a 264.5-metre tower designed by <a href="https://www.apartments.com.au/architects/bates-smart">Bates Smart</a>. The project would deliver 538 apartments, including 30 affordable housing units, alongside retail and commercial uses at the podium and ground plane.</p>

<p>It will rise from&nbsp;<a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">601 Pacific Highway</a>, a prominent 2,844 sqm triangular site adjoining Mitchell Plaza and fronting Pacific Highway.</p>

<p>The development is being pursued under the Housing Delivery Authority pathway after Stockland’s proposal was declared State Significant Development earlier this year.</p>

<p><img alt="First look: Stockland plans 52-storey mixed-use tower with 538 apartments in St Leonards" data-entity-type="file" data-entity-uuid="67f40f35-0458-47ab-80c0-a4e98a31838a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/stockland%201.png?VersionId=rxXe3njr.auuGDuiR0k42uI8Zr4K.gZA" /></p>

<p>The apartment mix includes 217 one-bedroom apartments, 191 two-bedroom apartments, 122 three-bedroom apartments, and eight four-bedroom residences. Six basement levels would accommodate 300 car spaces, bicycle parking, loading areas, and building services.</p>

<p>Bates Smart said the project has been shaped around a series of urban design principles intended to improve the pedestrian experience and respond to the evolving character of St Leonards.</p>

<p>“With a boundary length of almost 75m along Pacific Highway and 70m along Atchison Street to the north, complying simply with the LEP envelope and required setbacks would result in a very wide tower form on the skyline,” the architects noted in the Design Report.</p>

<p>“We propose breaking the tower form into two defined volumes rather than a singular form.”</p>

<p>The podium has similarly been articulated into separate forms to reduce perceived bulk and create a finer-grain response to Mitchell Plaza and Atchison Street. Retail tenancies would activate the lower levels, while commercial space is proposed across the podium floors.</p>

<p><img alt="First look: Stockland plans 52-storey mixed-use tower with 538 apartments in St Leonards" data-entity-type="file" data-entity-uuid="90149990-0551-40d2-bd48-14b69a015d12" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/stockland%202.png?VersionId=MJC2KIIWFvU9FPGr3IVq09gkRN_gX3m8" /></p>

<p>The design also places a significant emphasis on communal amenity and environmental performance. Residents would have access to landscaped terraces, wellness areas, flexible workspaces, and rooftop communal facilities, while the all-electric building is targeting an average 7-star NatHERS rating. Bates Smart said the project incorporates passive design measures including natural ventilation, integrated shading, and lightweight façade systems.</p>

<p>Planning documents note the site is around 350 metres from St Leonards Station and 400 metres from the metro entrance, placing it within one of Sydney’s most connected emerging residential precincts.</p>

<p>The project arrives amid a wave of large-scale redevelopment proposals reshaping the St Leonards and Crows Nest skyline. Several nearby sites have recently been approved, lodged, or declared under the Housing Delivery Authority pathway as the precinct absorbs significant residential density uplift tied to transit-oriented development policies.</p>

<p><img alt="Stockland" data-entity-type="file" data-entity-uuid="7805bd7c-dfd7-4b35-8e15-ec4a8bf8e61b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-20%20at%204.27.26%E2%80%AFPM.png?VersionId=iY12K2m2bQ6EeDnshqfZC9rbLx_oEugP" /></p>

<p>Bates Smart’s report describes St Leonards as transitioning away from its historical commercial identity toward a more mixed-use urban environment.</p>

<p>“In recent years, the character of St Leonards has started to evolve, driven by new development trends along the Pacific Highway corridor,” the report said.</p>

<p>“These projects have increasingly focused on residential accommodation, marking a shift from its purely commercial roots.”</p>

<p>Sekisui House Australia is currently selling Waterstone down near Newlands Park, in a pocket being branded "St Leonards South." Hyecorp recently completed Audrey in the same pocket.</p>


First look: Stockland plans 52-storey, 538-apartment St Leonards tower

Household Wealth

<html><body>
<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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Household financial comfort fell across regional Australia: ME Bank

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<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="column">GUEST OBSERVER</div>
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<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>
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<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>
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<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>
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<br>Foreigners held a record $792.2 billion of Aussie shares in the December quarter or 45.1 per cent of the total.</div>
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<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>
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<div class="column">New home sales: New home sales rose by 0.2 per cent in February. </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%208.24.38%20AM.png" target="_blank">Click to enlarge</a></div>
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<div class="column">What does it all mean?</div>
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<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>
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<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>
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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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<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>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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