Now for some good news – Australians are getting wealthier!

Yes we are getting richer!

Despite all the headlines about the risks posed by high levels of debt and falling property values, when Roy Morgan Research drilled down into the data a more balanced long term picture emerges –  a very positive long term trend. Now for some good news - Australians are getting wealthier!

Australia performed very strongly over the past 12 years compared with other OECD nations – particularly in Europe where many nations went backwards over the same period.

Since 2007, net wealth per capita in Australia has increased by 65.1%, with gains across all levels.

Not surprisingly, roughly half Australia’s personal wealth continues to be held in the form of owner occupied housing (49.8%), down slightly from 51.6% in 2007, while superannuation assets make up an increasingly higher portion, rising from 19.2% to 24.4% of our wealth since 2007.

The wealthiest 10% of Australians with an average net wealth of over $2 million (up by $811k from 2007), hold 47.9% of net wealth.

The poorest 50% of Australians with an average of $31k (up by $11k), who despite gains have seen their total share of net wealth fall from 3.9% to 3.7%.

The value of assets held by Australians has almost doubled from 2007 to 2019 (up 96.0%).

This is faster than the increase in debt of 78.6% over the same period.

As a result net wealth is now 98.7% higher in 2019 than it was in 2007.

Even after allowing for population growth and inflation the average Australian is better off.

These findings are from the second edition of the Roy Morgan Wealth Report, just released, which covers the period from just before the GFC (2007) to 2019.

Australia performed very strongly over the past 12 years compared with other OECD nations – particularly in Europe where many nations went backwards over the same period.

Key findings of the report include:

  • The value of assets held by Australians has almost doubled from 2007 to 2019 (up 96.0%). This is faster than the increase in debt of 78.6% over the same period. As a result net wealth is now 98.7% higher in 2019 than it was in 2007.
    property investors
  • Average per capita net wealth in real terms (adjusted for inflation), is 28.0% higher than it was in 2007 just before the onset of the global financial crisis.
  • It is important to note that the median net worth per capita in 2007 was only $124k, rising to $135.9k, up 8.8% after allowing for inflation. The median value is a more representative metric in such a highly skewed market, as 50% are above it and 50% below, it is the central value.
  • Women have improved their average net wealth position relative to men, with males now holding an average of 12.3% more wealth than women, while in 2007, they had a much higher 27.4% advantage.
  • Roughly half Australia’s personal wealth continues to be held in the form of owner occupied housing (49.8%), down slightly from 51.6% in 2007, while superannuation assets make up an increasingly higher portion, rising from 19.2% to 24.4% of our wealth since 2007.
  • The following chart shows that the average personal assets are now worth 8.1 times average debts, compared with 7.4 times debts in 2007.


Assets have grown faster than debt
Assets have grown faster than debt
Source: Roy Morgan Single Source (Australia) 12 months to March 2019, n = 51,362; 12 months to December 2007, n = 54,212.  Base: Australians 14 +.


Michele Levine, CEO, Roy Morgan, commented:

“We see daily headlines about the risks posed by high levels of debt and falling property values, but when we drill down into the data, a more balanced long term picture emerges. Although the last 12 months has seen a marginal decline in household net worth, it is important to understand it in the context of the long term trend. What we have seen here is a very positive long term trend.

“Housing debt has grown considerably since 2007, but not uniformly – Roy Morgan’s data shows wealthier cohorts have shown a much greater propensity to take on debt and those investors have more ability to handle downturns than more marginal borrowers in lower-wealth segments.

“A more detailed understanding of how debt and personal wealth are distributed can help dispel some of the more simplistic fears over debt, and give a more balanced view of its relationship to wealth creation in Australia over the long term.”

Since 2007, net wealth per capita in Australia has increased by 65.1%, with gains across all balance levels.

The average per capita increase for the lowest value 50% (Quintiles 1 to 5) of the population was 55.0%, while the average increase for the highest value 50% (Quintiles 6 to 10) was 65.5%.

The second edition of the Roy Morgan Wealth Report, just released, shows that the rich are getting richer while poorer cohorts are gaining but making little progress. Recession Australia Note Money Economy Squeeze Tighten Save Saving Budget Cut 300x200

Other key findings of the report include:

• The wealthiest 10% of Australians with an average net wealth of over $2 million (up by $811k from 2007), hold 47.9% of net wealth. The poorest 50% of Australians with an average of $31k (up by $11k), who despite gains have seen their total share of net wealth fall from 3.9% to 3.7%.

• Growing personal net wealth is highly correlated with age. The 65 and over segment have the highest average net wealth of $759k (up 95% since 2007), well ahead of the 25-34 group with an average of only $111k (up 6%).

• NSW has the highest average net wealth with $503k (up 91%), followed by Victoria with $465k (up 89%). Both are well ahead of all other state in amount and growth rate, mainly due to increased housing values.

• The following chart shows that the ten balance ranges of net wealth (deciles) examined in this release all showed gains from 2007 to 2019.

Net Wealth Deciles – Average Balance

Now for some good news - Australians are getting wealthier!Source: Roy Morgan Single Source (Australia): 12 months to March 2019, n = 51,362; 12 months to December 2007, n = 54,212. Base: Australians 14+ Note: Deciles represent 10% of the population based on net wealth; Note: ( ) = % points change from December 2007 to March 2019.

Michele Levine, CEO, Roy Morgan, commented:

“Although all wealth levels are showing gains, inequality remains a problem. If policy makers and the business community are going to close the gap they have to understand the complexity and makeup of the ten deciles shown here. 48797404_l

“It would be simplistic to look at the lowest 10% by net-wealth and think of them as a single uniform group of ‘poor people’ – but it’s not the case. 

“For example in the lowest 10% there is a large group of young Australians who have built up neither assets nor debts – hence their low net-wealth. And there is also a group of older Australians who own substantial assets, but whose large debts cancel out their net-wealth and bring them into the lower decile groups.

“Addressing the needs of poorer groups benefits the entire community and the economy generally, but that is not going to happen unless we break ‘the poor’ down into the right sub-groups and find solutions suited to their particular needs.”

fact: our markets are on the move
icon-podcast-large

Subscribe & don’t miss a single episode of Michael Yardney’s podcast

Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.

Need help listening to Michael Yardney’s podcast from your phone or tablet?

We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.

icon-email-large

Prefer to subscribe via email?

Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.


Michael Yardney

About

Michael is a director 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 his opinions are regularly featured in the media. Visit Metropole.com.au


'Now for some good news – Australians are getting wealthier!' have no comments

Be the first to comment this post!

Would you like to share your thoughts?

Your email address will not be published.
CAPTCHA Image

*


facebook
twitter
email