Trends in and Contributions to Private Sector Wealth | RDP 9109: Estimates of Private Sector Wealth

RDP 9109: Estimates of Private Sector Wealth 3. Trends in and Contributions to Private Sector Wealth

Tim Callen

October 1991

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Quarterly estimates of private non-human wealth at market prices are set out in Table 1. These show that at the end of the June quarter 1990, private wealth was $1,428 billion. This compares with a figure of $405 billion in the June quarter 1980. Private wealth is plotted in Chart 1. Wealth has grown strongly throughout the 1980s. This growth was particularly strong between mid-1985 and mid-1989. The stock market fall of October 1987 was the only major negative factor over this period. The four-quarter-ended growth in wealth has slowed from a high of 28 per cent in the December quarter 1988 to 8 per cent in the June quarter 1990. This is due to the levelling off in dwelling prices and the poor performance of the stock market over this period. Chart 2 shows the four quarter ended growth in real per capita wealth. This has grown almost continuously since the beginning of 1984 and averaged 4.7 per cent per annum between 1984 and 1989.

Table 1: Private Wealth ($ billion)
	Dwellings	Household Durables	Business Assets	Non-Official Holdings of Government Bonds	Notes and Coin in Circulation	Total Personal Wealth
Mar 1980	194.9	31.4	119.0	29.4	4.9	379.6
Jun 1980	205.1	31.9	135.4	28.0	5.0	405.4
Sep 1980	212.4	32.8	146.0	29.4	5.1	425.7
Dec 1980	220.1	33.5	152.8	30.6	5.6	442.6
Mar 1981	235.4	34.3	150.3	31.8	5.4	457.2
Jun 1981	245.8	35.1	157.4	30.3	5.6	474.2
Sep 1981	245.6	36.2	144.9	32.6	5.8	465.1
Dec 1981	257.2	37.8	153.8	35.7	6.3	490.8
Mar 1982	257.4	38.7	145.9	38.9	6.1	487.0
Jun 1982	267.4	39.8	147.8	39.8	6.3	501.1
Sep 1982	264.9	41.1	156.4	41.3	6.4	510.1
Dec 1982	266.2	42.0	156.7	46.7	6.9	518.5
Mar 1983	273.7	43.1	164.4	48.3	6.7	536.2
Jun 1983	283.5	44.4	182.9	48.7	6.8	566.3
Sep 1983	283.0	45.3	204.2	53.6	7.1	593.2
Dec 1983	295.7	46.2	218.7	61.1	7.8	629.5
Mar 1984	307.4	46.9	216.3	63.2	7.4	641.2
Jun 1984	319.2	47.6	209.1	62.5	7.8	646.2
Sep 1984	328.5	48.4	225.8	63.8	8.0	674.5
Dec 1984	328.8	49.1	226.6	64.0	8.9	677.4
Mar 1985	338.6	50.3	242.1	65.7	8.6	705.3
Jun 1985	346.4	51.9	223.6	62.6	8.9	693.4
Sep 1985	348.0	53.4	278.5	63.7	9.0	752.6
Dec 1985	364.2	55.5	282.5	63.9	9.7	775.8
Mar 1986	368.9	57.4	296.3	64.6	9.4	796.6
Jun 1986	357.6	59.0	308.6	62.3	9.6	797.1
Sep 1986	365.4	61.1	319.1	63.9	9.9	819.4
Dec 1986	368.5	63.6	360.1	72.3	10.6	875.1
Mar 1987	370.0	64.5	401.2	72.0	10.3	918.0
Jun 1987	377.1	66.3	375.6	73.1	10.6	902.7
Sep 1987	393.5	66.3	472.2	77.5	10.9	1,020.4
Dec 1987	417.5	67.7	391.7	74.3	12.0	963.2
Mar 1988	488.2	68.8	383.1	74.6	11.7	1,026.4
Jun 1988	531.2	70.7	420.1	73.6	12.0	1,107.6
Sep 1988	588.1	72.1	419.0	75.7	12.5	1,167.4
Dec 1988	643.2	74.1	423.4	74.8	13.6	1,229.1
Mar 1989	666.9	75.5	436.3	74.9	13.2	1,266.8
Jun 1989	697.5	77.3	461.8	69.3	13.3	1,319.2
Sep 1989	702.6	79.0	513.5	70.7	13.5	1,379.3
Dec 1989	716.3	81.1	504.4	71.3	14.5	1,387.6
Mar 1990	717.2	83.1	497.9	70.6	13.8	1,382.6
Jun 1990	741.4	84.4	524.6	63.8	14.0	1,428.2

Chart 1: Total Private Wealth

(Log Scale)

Chart 2: Growth in Real Per Capita Wealth

(Four-Quarter-Ended)

Tables 2 and 3 show the estimates of business wealth and dwelling wealth respectively.^[16] These two series are plotted in Chart 3. The rapid growth of dwelling wealth during 1988 is apparent; so is the strong performance of business wealth from 1983 until the stock market fall.

Table 2: Business Wealth ($ billion)
	[1]	[2]	[3]	[4]	[5]
	Non-Rural Equipment and Stocks	Non-Rural Non-Dwelling Construction	Rural Wealth	Australian Ownership of Foreign Assets	Overseas Ownership of Australian Assets	Total Business Wealth [1+2+3+4−5]
Mar 1980	58.7	31.0	53.3	4.3	28.3	119.0
Jun 1980	69.1	35.1	57.2	4.5	30.5	135.4
Sep 1980	76.6	38.0	59.3	4.7	32.6	146.0
Dec 1980	81.0	40.2	61.4	4.9	34.7	152.8
Mar 1981	78.7	39.9	63.5	5.1	36.9	150.3
Jun 1981	83.2	42.3	65.6	5.3	39.0	157.4
Sep 1981	72.9	38.5	68.0	5.7	40.2	144.9
Dec 1981	78.0	40.8	70.5	6.0	41.5	153.8
Mar 1982	71.1	38.3	72.8	6.4	42.7	145.9
Jun 1982	71.0	38.7	75.3	6.8	44.0	147.8
Sep 1982	75.3	42.4	78.2	7.2	46.7	156.4
Dec 1982	73.3	44.1	81.1	7.6	49.4	156.7
Mar 1983	76.5	47.8	84.1	8.0	52.0	164.4
Jun 1983	87.3	54.8	87.0	8.5	54.7	182.9
Sep 1983	100.8	63.0	87.9	8.9	56.4	204.2
Dec 1983	109.2	69.5	88.8	9.3	58.1	218.7
Mar 1984	106.0	70.7	89.7	9.7	59.8	216.3
Jun 1984	99.1	70.7	90.6	10.1	61.4	209.1
Sep 1984	111.2	75.4	93.6	11.3	65.7	225.8
Dec 1984	111.6	75.8	96.6	12.5	69.9	226.6
Mar 1985	122.6	80.4	99.5	13.7	74.1	242.1
Jun 1985	109.8	74.8	102.5	14.9	78.4	223.6
Sep 1985	150.9	93.8	98.8	17.2	82.2	278.5
Dec 1985	155.7	98.2	95.1	19.4	85.9	282.5
Mar 1986	168.7	106.1	91.4	20.1	90.0	296.3
Jun 1986	177.4	113.2	87.6	23.9	93.5	308.6
Sep 1986	188.0	119.6	86.7	27.0	102.2	319.1
Dec 1986	215.9	133.9	85.7	28.8	104.2	360.1
Mar 1987	243.8	147.9	84.7	32.5	107.7	401.2
Jun 1987	232.4	146.4	83.7	35.7	122.6	375.6
Sep 1987	295.0	174.9	86.3	42.2	126.2	472.2
Dec 1987	235.5	149.9	88.9	41.3	123.9	391.7
Mar 1988	227.0	147.8	91.5	41.5	124.7	383.1
Jun 1988	253.2	162.4	94.2	45.2	134.9	420.1
Sep 1988	251.6	162.5	102.4	46.8	144.3	419.0
Dec 1988	248.0	162.7	110.7	48.0	146.0	423.4
Mar 1989	252.5	165.9	119.0	51.9	153.0	436.3
Jun 1989	267.9	174.9	127.3	55.2	163.5	461.8
Sep 1989	303.8	196.2	129.2	59.4	175.1	513.5
Dec 1989	294.7	198.5	131.1	59.2	179.1	504.4
Mar 1990	285.5	200.0	132.9	63.3	183.8	497.9
Jun 1990	296.4	212.2	134.8	61.7	180.5	524.6

Table 3: Dwelling Wealth
	Number of Dwellings Completed	Residual	Net Change in Stock	Total Stock	Dwelling Prices	Value of Dwellings $ million
Mar 1980	27,465	2,400	25,065	5,024,917	38,796	194,944
Jun 1980	30,653	2,400	28,253	5,053,170	40,581	205,063
Sep 1980	30,890	2,400	28,490	5,081,660	41,793	212,378
Dec 1980	34,660	2,400	32,260	5,113,920	43,041	220,110
Mar 1981	28,560	2,400	26,160	5,140,080	45,789	235,357
Jun 1981	31,370	2,400	28,970	5,169,050	47,548	245,777
Sep 1981	34,080	2,400	31,680	5,200,730	47,217	245,565
Dec 1981	36,130	2,400	33,730	5,234,460	49,134	257,188
Mar 1982	28,450	2,400	26,050	5,260,510	48,938	257,438
Jun 1982	30,320	2,400	27,920	5,288,430	50,556	267,360
Sep 1982	31,370	2,400	28,970	5,317,400	49,808	264,852
Dec 1982	30,300	2,400	27,900	5,345,300	49,808	266,241
Mar 1983	30,690	2,400	28,290	5,373,590	50,929	273,671
Jun 1983	22,400	2,400	20,000	5,393,590	52,558	283,478
Sep 1983	25,620	2,400	23,220	5,416,810	52,245	283,000
Dec 1983	29,680	2,400	27,280	5,444,090	54,308	295,660
Mar 1984	25,280	2,400	22,880	5,466,970	56,220	307,353
Jun 1984	30,130	2,400	27,730	5,494,700	58,096	319,217
Sep 1984	32,080	2,400	29,680	5,524,380	59,471	328,540
Dec 1984	35,630	2,400	33,230	5,557,610	59,166	328,819
Mar 1985	29,550	2,400	27,150	5,584,760	60,632	338,614
Jun 1985	31,590	2,400	29,190	5,613,950	61,706	346,416
Sep 1985	33,900	2,400	31,500	5,645,450	61,651	348,046
Dec 1985	36,290	2,400	33,890	5,679,340	64,133	364,235
Mar 1986	27,480	2,400	25,080	5,704,420	64,663	368,868
Jun 1986	28,880	2,400	26,480	5,730,900	62,406	357,642
Sep 1986	28,330	2,400	25,930	5,756,830	63,473	365,401
Dec 1986	28,230	2,400	25,830	5,782,660	63,718	368,458
Mar 1987	24,350	2,400	21,950	5,804,610	63,744	370,010
Jun 1987	25,300	2,400	22,900	5,827,510	64,713	377,115
Sep 1987	24,770	2,400	22,370	5,849,880	67,260	393,462
Dec 1987	28,450	2,400	26,050	5,875,930	71,058	417,530
Mar 1988	25,070	2,400	22,670	5,898,600	82,757	488,153
Jun 1988	29,300	2,400	26,900	5,925,500	89,648	531,211
Sep 1988	31,530	2,400	29,130	5,954,630	98,759	588,072
Dec 1988	38,900	2,400	36,500	5,991,130	107,364	643,230
Mar 1989	31,510	2,400	29,110	6,020,240	110,784	666,946
Jun 1989	37,450	2,400	35,050	6,055,290	115,184	697,470
Sep 1989	39,470	2,400	37,070	6,092,360	115,325	702,600
Dec 1989	41,760	2,400	39,360	6,131,720	116,816	716,281
Mar 1990	33,020	2,400	30,620	6,162,340	116,388	717,221
Jun 1990	33,050	2,400	30,650	6,192,990	119,715	741,396

Chart 3: Dwelling and Business Wealth

(Log Scale)

The contributions of dwelling wealth and business wealth to total wealth fell slightly between June 1980 and June 1985 (51 per cent to 50 per cent and 33 per cent to 32 per cent respectively). Between June 1985 and June 1990, the contribution of dwelling wealth rose to 52 per cent and that of business wealth to 37 per cent.

Footnote

The sample of large non-mining, non-finance companies holds both equipment and NDC. The aggregate market value to historic cost ratio is essentially a weighted average of ratios for each type of asset. If the individual ratios for the two asset types differ, then the split between columns 1 and 2 of Table 2 will be incorrect. For example, if the ratio for NDC is higher than that for equipment, then the estimate of equipment will be overstated and that of NDC understated. However, the total of the two columns should not be affected. [16]