Here’s why Australia has 20% fewer millionaires

The world of finance is ever-changing, and last year - 2022 - was no exception.

The latest UBS Credit Suisse Global Wealth Report reveals some shocking statistics about Australian millionaires, and as someone who's been watching these trends for years, it's a revealing snapshot of our financial landscape. 

A Shrinking Pool of Wealth

The UBS Credit Suisse Global Wealth Report revealed the number of Australian millionaires declined by a significant 20% last year.

The report explained that factors such as rising interest rates, volatile asset values, and currency depreciation took their toll, leading to the fifth-largest national wealth decline globally.

Basically the property downturn we experienced last year was a major factor as were falling share prices.

However, it's not all gloom as about 1.8 million Aussies retained their millionaire status.

That's resilience for you.

But why is Australia still holding strong despite these setbacks?

Our strong property markets

Unlike other forms of assets, Australian real estate has proven resilient.

Despite the rapidly rising interest rates, the real estate market remained relatively resilient and as you can see from the table below the total value of the Australian housing market is back to $9.9tillion dollars having recouped most of the losses of 2022.

This is a trend we've seen before, and it's a reminder that bricks and mortar is a tried-and-true wealth creation strategy.

Global Context

While Australia faced declines, other nations like Russia, Mexico, India, and Brazil saw wealth increases.

Australia had about 3 per cent of the world’s millionaires during the year, down from 3.5 per cent the previous year.

Worldwide, about 59 million people achieved the milestone, or around 3.5 million fewer than in the previous 12 months.

“Asset values faced headwinds of higher interest rates, canceling the impact of strong saving on wealth accumulation,” says the 14th annual report, which covers the estimated wealth of around 5.4 billion adults around the world from across the wealth spectrum.

A Look at Median Wealth

The median Australian adult finished 2022 with a net worth of about $380,000, down $40,000 from the previous year when asset values were boosted by record superannuation returns and surging residential property prices.

On an average basis, Australia remained the fourth-richest country in 2021 behind Switzerland, the US, and Hong Kong.

The average Australian adult was worth around $765,000, a fall of about $89,000.

What's Next for Australian Wealth?

The report estimates a global wealth increase of about 38% over the next four years, reaching approximately $967 trillion by 2027.

It estimates that over the next four years the number of millionaires to reach around 86 million and the ultra-rich, who have a net wealth of around $46 million, to top 372,000.

Conclusion

The 2022 Wealth Report provides a stark look at the fluctuations in Australian wealth and the global landscape.

However, it also reveals an underlying resilience in real estate and the potential for future growth.

For those savvy enough to navigate these changing tides, opportunities still abound especially at the new upswing stage of our property cycle.

After all, in the words of Warren Buffett,

"The stock market is a device for transferring money from the impatient to the patient."

Of course, we can say the same for the Australian property market.

About Michael Yardney Michael is the founder of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.