We’re not as rich as we used to be, but we have more millionaires: Five nuggets from the ABS report on Australian wealth
Thursday, August 22, 2013/
We may not be as wealthy as we used to be, but we have more millionaires – and if we live in Tasmania, we’re more likely to own our homes outright.
Those are just some of the gems found in the latest report from the Australian Bureau of Statistics about Australian’s wealth and money habits.
Although much of the talk over the past few years has been focused on the rising costs of living, and how households are doing it tough, the report actually reveals something a little different – wealth is changing in different ways.
CommSec chief economist Craig James said in his own analysis of the report that while consumers may not be actively spending, the report shows that doesn’t mean they’re unable to spend.
“Household wealth is either at or near record highs and with home prices rising, wealth levels will follow suit,” he said.
“While there is plenty of attention paid to household debt, household assets continues to grow at a faster rate, lifting wealth levels to record highs.”
Among the richest 20% of households, the average net worth was $2.2 million. In the lowest 20%, it was just $31,000.
So is there any solid information here for businesses and entrepreneurs? Definitely. We’ve picked out five of the best pieces of information we think will be most useful:
We’re not quite as wealthy as we used to be…
In real terms, we’re not quite as rich as we used to be.
The ABS report shows “average” Australian households recorded a net standing of $728,000 in 2011-12. That’s down $30,000 from the two years prior.
However, it’s not all bad. As Craig James points out, over the past year home prices have risen by about 4% – so it’s likely we’re at an all-time high when it comes to measuring net worth.
And considering mean household net worth is up 24% since 2003, we seem to be doing okay.
…but we have more millionaires
The report shows more than 20% of families can be counted as “millionaires”, with their net worth above $1 million. According to James, that’s up 15% from just eight years ago.
As much as we like to complain about the economy, it’s clear many are still seeing the benefits of growth.
Tasmanians are more likely to own their homes outright
Australians consider ourselves a nation of home-owners, but really, we’re a nation of mortgage-holders – unless you live in Tasmania, that is.
The island-dwellers are the most likely to own their homes outright, at 35.3%. South Australia is just slightly behind at 33.9%, while the lowest proportion of owner-occupiers was in the Northern Territory, at just 16.5%.
Property is still in our DNA
But it’s true we’re still a nation of home owners. The value of the family home accounts for about 40% of household wealth, according to the ABS report.
Owner-occupied homes were the largest asset held by Australians, with more than two-thirds of the population owning a home outright or with a mortgage.
The distinction between those who buy and rent is clear: For owners, the average net worth was $790,000, while for those who rent, it was merely $160,000.
The middle class continues to grow
We’re seeing a lot more people rising out of the lower-income brackets now. According to the report, the proportion of people with wealth of up to $50,000 dropped from 14.6% to 12.7% during the eight years prior to 2011-12.
That’s a huge increase, and it’s a big deal for consumer-facing businesses: When the consumer spending pick-up occurs, there are plenty of companies waiting to benefit.