Invest
Do Aussies have an overweight exposure to property?
Aussies have an overweight exposure to property assets, increasing their risk to higher interest rates, an expert has warned.
Do Aussies have an overweight exposure to property?
Aussies have an overweight exposure to property assets, increasing their risk to higher interest rates, an expert has warned.
New data from the Australian Bureau of Statistics has revealed an increase of 5.8 per cent in total household wealth in the June quarter to a fresh record high of $13,433.7 billion, with wealth per capita climbing to $522,032.
Booming residential property prices were the chief driver of these record figures, with property assets accounting for two-thirds of total wealth ($8.94 trillion), while $3.56 trillion sat in superannuation and $1.18 trillion was held in shares, less than the $1.34 trillion held in cash deposits.
Although Aussies are now wealthier than ever, Russel Chesler, head of investments and capital markets at VanEck, drew attention to the fragility of that wealth.
Namely, what the statistics show is that Australians are stockpiling their wealth in property, exposing their risk to higher interest rates.
“Around two-thirds of household wealth is now held in bricks and mortar, compared to just 9 per cent for direct shareholdings, a proportion which has diminished in recent times as property values have surged,” Mr Chesler said.
“The time is well overdue for Australian households to address this imbalance and lower their exposure to the property market and the risk of prices correcting from current record levels when interest rates rise.”
Flagging the likelihood of higher interest rates as economic activity picks up in 2022, Mr Chesler alerted to the probability of an impending dent in the value of property assets and increased mortgage burdens.
“In contrast, the sharemarket could continue to gain as the Australian and global economies recover from COVID-19. Many equities will remain resilient to higher interest rates and may even benefit, like the banks. In addition to potentially creating wealth, there are other factors which favour shares over property as more accessible investments,” he said.
“Shares do not attract a huge stamp duty slug or require a deposit. You can invest much smaller amounts of money, unlike the property market.”
Further data from the ABS revealed an unprecedented $341.8 billion increase in the deposit assets of banks with the Reserve Bank of Australia (RBA), as the RBA injected further liquidity into the financial system in line with current monetary policy goals. The liquidity is said to have helped the quarterly growth of $26.0 billion (1 per cent) in bank loan assets.
“Growth in owner-occupier loan balances was the strongest in five years and consistent with ABS seasonally adjusted owner-occupied loan commitments data, which reached new highs over the first six months of 2021,” head of finance and wealth at the ABS Katherine Keenan said.
RELATED ARTICLES
About the author
About the author
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
