Australians suffer biggest fall in wealth on record

If you are feeling a lot poorer than last year, there is a very good reason – official Treasury figures have confirmed that the wealth of the average Australian plunged 11.8% in 2008, the biggest fall since records began in 1960.

Federal Treasury figures shows that Australia’s private sector wealth stood at $4.9 trillion as at the end of December 2008. CommSec economist Savanth Sebastian estimates per capita wealth stood at $223,985 as at the end of December, down $24,627 or 8.2%.

But when the decline is adjusted for inflation, CommSec estimates the fall of wealth in real terms was a record 11.8%.

“The latest figure essentially quantifies the collateral damage experienced domestically as a result of the global economic slump,” Sebastian says.

“The sharp decline in wealth levels have no doubt had an adverse impact on consumer sentiment and in turn spending levels have languished. Consumers and businesses are likely to remain uncertain about the economic environment.”

However, Sebastian is quick to point out that the news is not all bad.

The average Australian’s wealth levels remain more than 75% higher than a decade ago, which should provide a decent buffer for most households to try and get through the recession.

“And despite the unprecedented four straight quarters of declining wealth levels, there is likely to be some good news in the March quarter,” Sebastian says.

“The improvement in house prices in the early months of 2009 and also the sharp pick up in the sharemarket over March should help support wealth.”

And if you need further consolation about the state of your fortune, just remember that you probably haven’t fared as badly as the super rich.

According to a recent survey by consultancy Oliver Wyman, the financial crisis has caused high-net-worth individuals to lose $US10 trillion, or a quarter of their wealth. 

Related stories:

• Taxman cranks up the wealth-scan
• How to avoid losing money on property