Finance

Where are we ten years after the Global Financial Crisis?

Michael Yardney /

It’s official: The rich keep getting richer according to the latest Credit Suisse Global Wealth Report

Australia’s wealth per adult in 2017 is $US402,600 ($531,000), the second highest in the world after Switzerland.

And the proportion of Australians with wealth above $US100,000, at 68%, is the fourth highest of any country, and almost eight times the world average.

The good news is this is unlikely to change any time soon with this group of high net worth individuals projected to grow by 7.9% per annum over the next five years, to 4,400 people by 2022 due to the relative strength of Australia’s economy, our rising share market and a growing propensity to invest overseas and in technology ventures.

It is no coincidence the high level of property ownership and the high prices of Australian capital city real estate has underpinned the average Australian’s wealth.

But our poor are not getting poorer

At the same time, wealth inequality (the gap between the rich and the poor) is relatively low in Australia, with only 5% of our population having net worth below $US10,000.

This compares to 19% in the UK and 29% in the US.

This is at a time when “global wealth inequality has certainly been high and rising in the post-crisis period” according to the report.

In fact, the world’s richest 1% own half the world’s wealth, and have seen their share of the globe’s total wealth increase from 42.5% at the height of the 2008 Global Financial Crisis to 50.1% in 2017.

The report states: “The share of the top 1% has been on an upward path ever since [the GFC], passing the 2000 level in 2013 and achieving new peaks every year thereafter.”

With 1,728,000 Australians in the top 1% of global wealth holders, Australia accounts for 3.5% of this top slice, despite being home to just 0.4% of the world’s adult population.

Additionally, more Australians are worth $US50 million and over today than ever before.

One more thing: while the wealthiest 10% of people own 87.8% of global wealth, at the other extreme, the poorest half of the world’s population – 3.5 billion people – own just 2.7% of global wealth.

Source: Credit Suisse Global Wealth Report

Millennials are not so lucky

While the Baby Boomers are wealthier than their parents the Credit Suisse report explains their children, the “unlucky millennials”, face more difficulties accumulating wealth – in part due to their hefty student debts, higher unemployment and the probability they will have to pay for pensions of baby-boomers.

But the good news (if you can call it that) is that these millennials are likely to inherit substantial sums of money.

What’s ahead?

Despite all the world’s problems, the financial outlook for the next five years looks positive with global wealth likely continue to grow at a similar pace to the last five years according to Credit Suisse.

Not surprisingly, emerging economies (including China) are expected to generate wealth at a faster pace than developed countries, and are likely to achieve a 22% share in global wealth at the end of the five-year period.

The report’s outlook for the millionaire segment is more optimistic than for the bottom of the wealth pyramid (less than US$10,000 per adult). The former is expected to rise by 22%, from 36 million people today to 44 million in 2022, while the group occupying the lowest tier of the pyramid is expected to shrink by only 4%.

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Michael Yardney

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia's leading experts in wealth creation through property and writes the Property Update blog.

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