Australians have the highest median wealth in the world — why aren’t we investing in property?
Friday, November 2, 2018/
It’s official — the Credit Suisse Global Wealth Report 2018 found Australians have overtaken the Swiss to be number one in the world when it comes to highest median wealth.
According to the report, which analyses the wealth held by five billion adults across the globe from the least affluent to the wealthiest individuals, the median or middle level of wealth (assets minus debts) held by Australian adults is $US191,453.
Switzerland has a higher average wealth than us as because of a few ultra-high-net-worth individuals who skew the figures.
The report shows collectively Australians have a net worth of almost $10.4 trillion. This includes assets worth $12.8 trillion, minus liabilities worth $2.4 trillion.
Now I know many Australians whose wages have not gone up for a number of years and who are battling with rising energy costs and record high petrol prices are thinking ‘that’s not me — that’s the 1%’.
However, what they forget is compared to the rest of the world, they are the 1%!
Yet, our consumer confidence is at very low levels. We’re suffering a crisis of confidence because of the barrage of scary headlines the media keeps throwing our way.
And it’s much the same with property. Currently, many home buyers and property investors are worried.
Last year they were worried they would miss out on the rising property prices (they had FOMO, or a fear of missing out). Today its FOBE, a fear of buying early, worrying prices will drop further.
Too many investors are basing their decisions on media coverage and ignoring the fundamentals.
- Our economy is chugging along nicely and is the envy of most developed nations;
- Our interest rates are at historically low levels and unlikely to go up any time soon;
- We’re creating more jobs than ever for our fast growing population; and
- We’re not building enough dwellings to accommodate all the new households and, with the exception of Perth and Sydney, vacancy rates are at all-time lows.
Yes, investors are making decisions that will affect the next 30 years based on the last 30 minutes of news. They forget all the good news and how we are the wealthiest nation in the world.
A lot of our wealth has to do with super and property
According to the Credit Suisse report, the average wealth of an Australian adult has increased to USD $411,060, mainly courtesy of growth of property prices and superannuation balances.
In fact, since 2000, the average growth rate of wealth per Australian adult was 12% per annum.
Plus, about 60% of our median wealth is due to property ownership, with the remainder generally reflective of our mandatory superannuation system that generates strong pension wealth and is the envy of others.
While some Australians might not feel wealthy, by undertaking a global comparison this report proves they are.
The report also found wealth is more evenly distributed in Australia than other comparable countries with 6% of our adult population having a net worth below USD $10,000.
On the other hand, in the UK that figure is 18% and in the US it is 28%.
The proportion of Australians with wealth above USD$100,000, at 67%, is the fourth highest of any country, and about seven times the world average.
Also, we have nearly 1.6 million people in the top 1% of global wealth holders, which represents 3.2%, even though Australia is home to only 0.4% of the world’s adult population.
What does it all mean?
If you ask me this research is just further proof we’re the lucky country.
Not only do we have one of the highest proportions of home ownership in the world, but we also have an ethos that supports anyone prepared to have a go.
Over the course of my property investment journey, I have been delighted to see the increasing numbers of Australians who are keen to improve their financial futures.
No longer are they satisfied with simply paying off the mortgage on their home or naively hoping they will be happy to merely survive on a pension when they retire. Rather, they are opting to take charge of their finances today.
You see, before the start of the 21st century, property investment was not a wealth creation tool many people thought about.
Most of our population was committed to the concept of the ‘great Australian dream’, but few considered doing anything different than what their parents and their grandparents did.
Over the past three decades, I have been proud to help thousands of ordinary Australians to improve their financial futures. Some have opted to simply buy one or two investment properties, while others have grown their portfolios by many more.
But whatever number of properties they have opted to buy, the one thing they had in common is they took action. And those who have done the best often took action when everyone else was sitting on their hands worrying about all the bad news.
Like 10 years ago during the global financial crisis, during the tech wreck of the early-2000s, the Asian financial crisis of 1997 or the recession of the early-1990s.
They recognised life on the pension in their twilight years is not the type of retirement they have ever dreamed about. In fact, it is the stuff of nightmares. Instead, by working with an expert team, they have become active, rather than passive, in their own wealth creation efforts.
I have no doubt this is one of the reasons Australia is now punching well above its weight on the world wealth stage. And I have no doubt we will continue to do so in the years ahead because Aussies are not afraid of hard work and we’re not afraid to forge our own paths to create lives far from ordinary.
And those who take action now, while others sit back worrying about the continuous conveyer belt of negative press, will look back at these times and appreciate the opportunities they are delivering.
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