It’s Official: Australian households’ net wealth now over 8 trillion dollars and growing

We really do live in the lucky country

Sure we have lots to complain about, but millions would trade places and live in Australia if they could. 

Apart from having some of the most liveable cities in the world, we area  wealthy nation.

This was once again confirmed in Roy Morgan’s newly released report ‘Superannuation and Wealth Management in Australia’ (October 2017).

Despite considerable focus being given to issues relating to rising household debt in Australia, it is worth noting that even allowing for this debt, Australian households' have increased their net wealth over the last four years from $5.7 trillion to $8.1 trillion, an increase of 42.1%.

And not surprisingly, the....

Value of owner occupied homes dominates household net wealth

The total increase in household net worth in Australia since 2013 was $2.432 trillion (from $5.703 trillion to $8.135 trillion), of which $1.387 trillion (or 57%) was a result of the increase in the equity of owner occupied homes.

Source: Roy Morgan Single Source (Australia). 12 months to September 2013, n= 49,846; 12 months to September 2017, n=50,020. Base: Australians 14+ 

Currently:

• 53.1% of household net wealth is made up of equity in owner occupied homes, up from 48.1% in 2013.
• Superannuation, Pensions/Annuities in total now account for 27.4% of the total, down from 28.6% in 2013.
• The other components of net wealth, which include bank accounts, managed funds (excluding superannuation) and direct investments, have fallen from 23.3% in 2013 to 19.5% in 2017.

Owner occupiers also lead in the value of investments held outside of their homes

Although people living in owner occupied homes account for only 65.2% of the population, they hold 85.0% of the total funds in superannuation, 89.7% of all direct investments and 86.9% of bank deposits.

These assets combined with the equity in their homes, results in them holding 94.4% of total household’s net worth.

This leaves those who are non-home owners (34.8% of the population) with only 5.6% of the total.

Norman Morris, Industry Communications Director, Roy Morgan Research says:

“There are clearly two groups in Australia when it comes to household wealth and its rate of increase. There are those who own or are paying off their home and those who are not. The rapid rise in home values in Australia over the last few years has left those who are not owner occupiers well behind in their share and level of household net wealth.

“Although superannuation funds have increased considerably over recent times, they have grown at a slower rate than the increase in home prices, leaving them holding a lower share than four years ago and currently just over a quarter of household net wealth. This makes it very likely that for some years to come, retirement funding will need to come from household resources outside of superannuation. Those people not in their own home have not made up for it by investing elsewhere, as shown by the fact that they have less in other investments compared to owner occupiers.

“This report highlights the fact that the topics of household debt, superannuation adequacy, home ownership, direct investments and savings all play a part in understanding the real financial position of Australian households'. It examines the ‘net wealth’ position of households', as it is ultimately this concept that will determine the financial wellbeing of households' into the future, particularly their ability to cover financial needs for retirement including coping with their level of debt.”

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.