Thursday, July 16, 2009

We're down half a trillion

Feeling poorer?

Since December 2007 you've lost $33,500 if you're an "average" Australian. If you come from an average household, it's lost around $110,000.

Commonwealth Securities has calculated the losses using Treasury data released to economic modelers yesterday and Australian population estimates.

The Treasury says Australian households have lost a total of $602 billion in the five quarters since the crisis took hold, the longest run of wealth destruction in the five decades it's been compiling figures.

Household wealth per person peaked at $250,200 in December 2007 and fell to $216,700 by March. The Treasury estimate pulls together property, share market and financial wealth and is not broken down into components.

Income is also falling...

...with share market dividends sliding a record 37 per cent in half-year to March and take-home pay actually going backwards in the March quarter - the first such slide since the early 1990s recession.

Wage income fell 3 per cent in the first three months of this year as full-time work was switched to part-time work and overtime cut.

Income from unemployment benefits climbed to an all-time high with a record $3 billion paid out to job seekers by Centrelink , up from $2.7 billion in the December quarter.

"These figures quantify and bring home the profound impact of the global slump," said CommSec economist Savanth Sebastian. "The sharp decline in wealth has has hurt consumer spending, cascaded to weaker business profits and is pushing up unemployment."

CommSec believes the latest decline in wealth will be the last for some time.

"We think wealth recovered in the June quarter. House prices climbed and the share market improved substantially. The slide should be over," said Mr Sebastian.

Residex data released also yesterday showed national house prices climbing a further 0.7 per cent in June after climbing 2.1 per cent in May, enough to claw back all of the losses over the last year.

Residex says the typical Sydney house price is now $577,500, up 0.8 per cent over the year, and the typical Melbourne price $492,500 - up 2.7 per cent, the best performance in the nation.

The price rises are most striking for units with prices in both Sydney and Melbourne up 5.7 per cent over the first six months of this year.

"Units are benefiting substantially from strong first home buyer demand," said Westpac economist Matthew Hassan. "The uptrend in prices appears to be building momentum, attracting interest from upgraders and investors."

"It is also removing a significant downside risk to the consumer and economic outlook stemming from the potential for house price falls to cut household wealth and weigh on consumer demand."

The Seek employment index for June points to a slowdown in deterioration in the labour market with the number of new jobs advertised on the Seek site falling a further 4.5 per cent, but the number of new job applicants climbing only 0.2 per cent.

Seek managing director Joe Powell said the news showed the jobs market stabilising rather than improving.

Published in today's SMH and Age

Graphic: Arthur 2