The wealth of Australian households reached a record $5.1 trillion last year, thanks to a bumper 12% increase in wealth achieved over the 12 months to June 2007, according to new Treasury research.
But, according to the Treasury Economic Round-Up discussion paper, while we are getting richer, an increasingly large proportion of that wealth is tied up in the family home.
Australians now have 66% of their wealth tied up in their homes, up from 59% a decade ago and 52% 20 years ago.
Taking out the value of the family home, household wealth at June 2007 totalled $1.7 trillion. This is still ahead of the $1.1 trillion households have stored away in superannuation, despite recent record breaking investment returns and the superannuation tax reforms that saw contributions surge 60% during 2006-07 to $122 billion.
The upshot? While Australians are getting richer, the vast majority of that new wealth is being plowed into a buying a bigger and better home rather than into the super fund for retirement. That’s not necessarily a bad thing of course – unless house prices start falling.