Market sell-off abetted 11pc hit to household wealth

Australia was one of only four countries to suffer a decline in household wealth north of 9 per cent in the first three months of 2020, partly triggered by the fearful flight from stocks and bonds to cash, says Credit Suisse.

According to the investment bank's annual global wealth report, household net financial wealth (financial assets such as shares and deposits minus debt) in Australia fell by 10.7 per cent in the first three months of 2020 as the coronavirus pandemic first hit.

"While shareholdings fell 13.2 per cent on average, currency and deposits rose 2.9 per cent.".

Australia's percentage change in the composition of financial assets over the three-month period was among the most marked, with a decrease in holdings of securities (mainly bonds) of just over 20 per cent (second only to Spain) and a decrease in share holdings of just over 5 per cent.

Over the same period that net wealth fell 10.7 per cent, Australians increased their household debt position by just under 1 per cent.

However, despite the household and individual declines, early indications are that levels of wealth in Australia and around the world have almost regained the losses of the first quarter.

"We are likely to see a similar impact on household finances and wealth creation that we witnessed after the GFC, when average wealth fell 10.1 per cent in 2008, but over half of the loss was recovered in 2009 and global wealth per adult ended 2.4 per cent above the pre-crisis level by 2010," he said.