The keys to Australia's household wealth

Anthony Doyle

Firetrail Investments

Australians are amongst the richest in the world, helped in large part by the value of dwellings and our compulsory Superannuation system. Today, Australia's household wealth stands at almost $14 trillion.

One of the most important channels that lower interest rates works through is via higher asset prices, leading to increased levels of household wealth. Theoretically, households should consume more as wealth rises. Changes in the ‘wealth effect’ are a key factor in assessing the  outlook for the Australian economy, because a large share of the economy is household consumption.

Low interest rates are designed to spur borrowing, reduce saving, and generate higher house prices. This assists the RBA in meeting its goals in terms of employment and inflation by stimulating consumption. The longer term question for the Australian economy is whether the run-up in asset prices (and subsequent increased levels of household debt) will result in rising financial instability risks in the future, particularly should interest rates need to increase to control rising inflationary pressures.

In the attached analysis, I delve into Australia's household wealth. For investors, understanding the impacts of higher house prices on wealth, and which companies and sectors stand to benefit most from the increased consumption that will likely follow, could help them in their pursuit of long-term share market gains.

Never miss an insight

Enjoy this wire? Hit the ‘like’ button to let us know. Stay up to date with my content by hitting the ‘follow’ button below and you’ll be notified every time I post a wire. Not already a Livewire member? Sign up today to get free access to investment ideas and strategies from Australia’s leading investors.

Four reasons to register for Livewire’s 100 Top-Rated Funds Series

Livewire's Top-Rated Fund Series gives subscribers exclusive access to data and insights that will help them make more informed decisions.

Click here to view the dedicated website, which includes:

  • The full list of Australia’s 100 top-rated funds.
  • Detailed fund profile pages, with data powered by Morningstar.
  • Exclusive interviews with expert researchers from Lonsec, Morningstar and Zenith.
  • Videos and articles featuring 16 top-rated fund managers.
This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser.

Anthony Doyle
Head of Investment Strategy - Firetrail S3 Global Opportunities Fund
Firetrail Investments

Anthony Doyle is Head of Investment Strategy for the Firetrail S3 Global Opportunities Fund. His primary responsibilities include fundamental idea generation, portfolio analysis, and economic insights including currency and macroeconomic risk...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.