Since 2008, the global financial crisis has wiped out more than $70,000 from the value of assets by the average Australian household. In 2011 alone, about $40,000 were lost from the average household assets value, a report by the Reserve Bank of Australia released on Thursday said.

The RBA's Financial Stability Review, released twice a year, pointed out that debt of Aussie households outpaced growth in income even in there was an increase in the proportion of mortgage customers running late with their repayments.

The crisis has also spurred households to save more at 10 per cent of their disposable income, up from less than 2 per cent in about 2005. To achieve higher savings rate, Australian households cut spending to offset the 4 per cent drop in property values.

All these developments led to the real net worth per household which included the value of the family house, shares, superannuation and cash savings going down 11.5 per cent below 2007 peak. Compared to 2011, the value of assets plummeted 6.5 per cent to an average of about $600,000.

Despite the drop in asset value, the RBA report said households generally appear well placed to meet their debt obligations and aggregate indicators of financial stress indicate households are coping reasonably well with debt levels.

Despite claims by the Gillard government that the Australian economy "is the envy of the world," Deloitte Access Economics Director Chris Richardson pointed out that the extraordinary growth of wealth was felt during the Howard era. During this period, the average Australian went to work, saved and came home to realise their house had earned more that day than they did.

As a result, savings rate was low because people's wealth was rising anyway. However, Mr Richardson pointed out that the 2008 global financial crisis changed all that. Baby boomers were preparing for retirement, got into the housing market, supported their young children and carried their responsibilities at the same time.

"It's no surprise that the Gen X and Gen Y changed their behaviour first.... We judge out own sense of wellbeing by comparing ourselves to others, and we know we're worse off, but we haven't recognised it is happening to everybody else," Mr Richardson told The Australian.

The RBA acknowledged the fall in wealth is a sharp break from the trend of the past 10 years when consumers enjoyed rising share and house prices which lifted the average level of household assets by 6.5 per cent annually.

The Howard government rode on the surge in consumer confidence with rapid growth in consumption financed by home-equity loans, that by the mid-2000s, households boosted their income by an average of 4 per cent a year by borrowing against their home. However, since 2008, households have to inject about 3 per cent of their income into paying off their home loans, the RBA explained.

When the RBA compared household debts with income, it found that debts have declined to 150 per cent from a peak of 154 per cent of household disposable income in the mid-2010. However, it is still very high when compared with only 50 per cent at the start of the 1990s.

RELATED STORIES