Average wealth 'suffers biggest fall in 25 years'

Turmoil on the stock markets and falling property values saw the average wealth of Australians drop five per cent in the first half of 2008 - the biggest six-month drop since the 1982-83 recession, it has been reported.

Newspaper the Australian said the figures from investment bank ABN Amro are the latest indication that the economy is slowing down and that it could be headed for the dreaded R-word.

ABN Amro chief economist Kirean Davies said: "The rapid decline in wealth is another series that can be added to the already long list of indicators that are behaving as if the economy is on the edge of, or in, recession."

He added that declines in average wealth are unusual and since the end of World War II, the only drop steeper than the one experienced in the first half of 2008 was during the recession of the early 1980s.

The most recent drop has been largely fuelled by declining stock prices and depreciating house prices, the newspaper said.

Property values, which account for around two-thirds of overall household wealth, are estimated to have fallen by two per cent in the first six months of the year.

Meanwhile, the average value of household assets such as stocks and shares fell by 6.6 per cent in the three months to March and a further 1.25 per cent to 1.5 per cent in the quarter to June.

However, finance minister Lindsay Tanner said that although the economy is slowing, those predicting a recession are "ahead of the facts".

"It's crucial that we don't get spooked by one or two bad sets of figures," he said.

According to recent estimates from Commonwealth Securities, average private wealth in Australia currently stands at just over $250,000.

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