It’s official: the rich are getting richer.
Well-off Australians are pulling away from the rest of the nation, with inequality of wealth rising in recent years, according to the Australian Bureau of Statistics ‘s latest Household Income and Wealth Australia 2017-18 report.
The figures show that despite average household incomes having stagnated, with virtually no growth since 2013, the rich are getting richer because they own assets – in particular they own property and superannuation.
In fact, the report shows how wealth is highly concentrated in Australia.
The average net worth of the top 20 per cent of households is more than 93 times that of the lowest 20 per cent — some $3.2 million compared to just $35,200.
Source ABS and ABC
Wealthiest 20% own 80 times that of the lowest 20%
While the average Australian household has seen wealth increase by 15% in the last 2 years (from $809,900 to $929,400), the highest fifth of households have experienced an average increase of 16% (an increase of $392,000).
Only those in the fourth and fifth quintiles have a net household wealth ($949,800 and $2,906,400 respectively) that exceeds the average house price ($694,000), while the highest quintile households on average have a net worth exceeding 4 average Australian homes.
Top 20% have incomes 11 times the lowest 20%
The top 20% of income earners in Australia earn almost as much as the other 80% of households combined.
As a ratio, households earning in the highest 20% on average earn 11 times the average bottom 20%.
Average household wealth tops $1 million
According to an A.B.S. report average household wealth passed the $1 million mark in 2017–18, a rise of 37 per cent compared to just over a decade ago.
ABS Chief Economist, Bruce Hockman, said in 2017–18, average household wealth was $1.02 million compared to nearly $749,000 in 2005–06.
The main contributors to household wealth continued to be property and, increasingly superannuation, with average household super balances nearly doubling over the past 12 years.
“While ABS data has shown that there is a recent downturn in the property market, over the longer term there has been sustained growth (37 per cent since 2005–06).”
“Over the same time, the average household superannuation balance has almost doubled (90 per cent) from $112,500 in 2005–06 to $213,700 in 2017–18”.
“The share of wealth between households in Australia has remained relatively stable since 2011–12”, Mr Hockman said.
“In 2017–18, the wealthiest 20 per cent of households still held over 60 per cent of all household wealth, now averaging $3.2 million per household.
“By comparison, those in the middle 20 per cent held 11 per cent of all household wealth, averaging $564,500 per household in 2017–18.
“The lowest 20 per cent controlled less than 1 per cent of all household wealth, with average wealth currently at $35,200.”
Wealth in Australia is now determined by how many assets you own
In a paper recently published by social scientists Professor Lisa Adkins, Associate Professor Melinda Cooper and Professor Martijn Konings, they argue that Australian society is now split into five, asset-based classes.
At the top of the pile is Australia’s “investor” class, which comprises individuals who mostly live off the income earned through their assets.
Next are those who own their homes outright, followed by those with a mortgage.
The fourth and fifth rungs are occupied by renters and people experiencing homelessness respectively.
The report suggests “it is no longer possible to speak about a broad middle class” in Australia.
The New Daily reports the authors as saying:
“Low interest rates and tax settings that encourage investment in property further compound the issue, as they both drive up the price of housing.
“This was pushing up the value of capital relative to wages, which in turn was serving to create “patrimonial” society.
“It means having the right parents matters a lot more than it used to, because assets that are directly heritable are completely untaxed in Australia,” he said.
“This is already happening, and I think it will become more evident in time.”
Ms Cooper said the new class system proved “it is no longer possible to speak about a broad middle class”.
And colleague Dr Adkins said it was entrenching inequality and eroding social mobility.
“We’re talking about a fundamental restructuring of class and inequality,” Dr Adkins told The New Daily.
“Many people talk about [inflated property prices] as a bubble that might burst … but our argument is that this is a systemic shift in society … it’s the new normal.”
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