Coronavirus: Household wealth plunges $200bn

The COVID-19 stockmarket collapse left households’ net worth lower by nearly $10,000 per person in the March quarter.

The rout in financial asset prices left Australian households’ net worth lower by nearly $10,000 per person. Picture: istock

The COVID-19 stockmarket collapse drove a $200bn plunge in household wealth in the March quarter, the steepest fall in approaching a decade.

The rout in financial asset prices left Australian households’ net worth lower by nearly $10,000 per person – the steepest quarterly hit since September 2011, new figures from the Australian Bureau of Statistics showed.

This was equivalent to a total drop in net worth of $204bn, or a 1.8 per cent fall.

Australian shares lost a quarter of their value over the first three months of the year, after losses on the ASX and across international bourses accelerated from late February as it became clear that a Chinese epidemic had gone global.

The drop in Australians’ personal net wealth was partly offset by an increase in dwelling values as the housing market proved resilient through the early weeks of the crisis. A fall in outstanding loans also ameliorated the decline in net wealth.

Household net worth was $11 trillion in March, with housing and land wealth at $7.3 trillion.

In contrast, during the GFC, household net worth declined a larger 2.6 per cent over the March 2008 quarter, when housing and financial markets both suffered falls.

The hit to superannuation funds over the first quarter of 2020, however, was even more severe than the worst of the global financial crisis.

Total pension assets plunged 9.2 per cent, the largest quarterly decline since the series began in 1988. The decline was slightly larger than the 9 per cent decline at the height of the GFC in December 2008.

Australian shares have rallied 15 per cent since March 30, although they remain 18 per cent below their late February highs.