According to analysis by CommSec of figures from Federal Treasury, the average wealth of each Australian rose $2,500 in September 2010 quarter to $261,500, thanks mainly to a sharp lift in share prices over the second half of the year.
The latest increase means that after adjusting for inflation over the last decade, average wealth levels have increased by 95%.
"Australia may be susceptible to natural disasters like floods, bushfires and drought, but remarkably our prosperity levels are unaffected," CommSec's chief economist Craig James says.
"Disasters strike, we deal with the effects, and then we move on, as we have always done."
While the rise in wealth might help boost the confidence of still-fragile households, it is the fall in debt levels that is perhaps most remarkable.
Private sector debt fell by 3.2% during the September quarter, meaning per capita debt is now down at about $24,000. Debt it now down 2.9% against a year ago, and has fallen in annual terms for 15 consecutive months.
James describes the debt decrease as being "almost unprecedented over the past 50 years".
"At no point in the past 36 years has there been a more significant reduction in private sector debt."
"It may have taken a global financial crisis to change our attitude to debt, but our new-found desire to live within our means has favourable long-term consequences."
A reduction in household debt will certainly calm fears that Australia's high debt presented a long-term risk to economic stability. If households allocated funds to debt repayment, some pressure will be taken off interest rates.
But when money is being spent repaying debt, it's not being spent at the shops – a fact that retailers understand only too well.
And with James arguing that this saving trend does not look like changing in the short-term, Australian retailers could be in for more pain.
