Household wealth hits record high, but 67% of wealth held in property; are Australians overexposed?

Simon Arraj

Australians household wealth hit a record high in the December quarter of 2024 at $16.95 trillion, with property accounting for 67% of wealth, exposing Australians to a risk of wealth erosion if property prices fall, according to according to Simon Arraj, Founder of Vado Private.

Household wealth rose by $143.6 billion during the December quarter, up 6.5% year-on-year, new data from the Australian Bureau of Statistics shows.  Net worth was boosted by a record level of residential dwellings and land totalling $10.60 trillion, up around 5% from a year earlier while cash investments also hit a record at $183.85 billion.

“The data reveals households are holding high levels of cash despite falling interest rates. Household cash and deposits investments struck $183.85 billion, jumping 8.3% from a year earlier. Australians are devoting more of their money to an asset class that is yielding real returns close to zero,” Mr Arraj said.

“At the same time, more than two-thirds of household wealth is now locked up in bricks and mortar, a proportion which has increased in recent times as property values have risen, boosting demand for housing credit in 2024. Australians’ demand for property is growing, despite generally yielding a return of less than 5% p.a.,” Mr Arraj said, adding that slowing in property price growth posts risk to wealth gains.

“With such a large proportion of household wealth tied up in property and cash, it makes sense for Australians to diversify their assets into higher yielding investments, which can deliver reliable income and protect against the share market falls we’ve seen this year and which could continue,” Mr Arraj said.

The Australian share market has dropped around 3.0% over the 2025 year to 27 March, as measured by the ASX/S&P200. In the US, equity markets have also dropped, led by technology shares, with the Nasdaq Composite Index down around 7.3% over the year to date, and the S&P 500 down 2.8%.

According to Mr Arraj, private credit funds can offer investors relative stability and regular income, with yields between 8% and 10% per annum, higher than those offered property or corporate bonds, as measured by the S&P Australia Investment Grade Corporate Bond Index, which returned around 5.9% over the year to 26 March 2025.

“Private credit, or non-bank lending to companies, can offer Australians attractive risk-adjusted returns. Importantly in the current times of greater share market volatility, investing in private credit can reduce the risk of equity losses during downturns,” he said.

“This represents an attractive opportunity for investors to benefit from regular income while their capital is protected by loans’ senior secured position at the top of the capital stack. Moreover, with interest rates on savings accounts so low, typically yielding less than 2% p.a.,

well below the inflation rate of around 2.5%.

“Investors would also be wise to remain cautious about equities moving ahead. Heightened uncertainty about US trade tariffs and a slowing Australian or US economy may cap share market gains and even see them correct even more this year. Private credit can provide much calmer waters for investors than share markets,” Mr Arraj said.