Australia’s wealth is much more evenly distributed than other countries, a new report reveals, but start-ups are still being urged to choose their target markets carefully.
The 2011 Credit Suisse Global Wealth report analyses the wealth of the world’s entire adult population of 4.5 billion people.
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It’s estimated the average wealth level in Australia rose to $396,745 this year, making Australian residents the second richest behind the Swiss, whose average level of wealth is $540,010.
But based on a median average, Australians’ wealth level is higher than in any other country.
According to the report, Australia has a median wealth of $217,559 – the highest in the world and nearly four times the amount of each adult in the United States.
The report found the wealth rate per adult in Australia has quadrupled over the past decade, with the country’s total wealth recorded at US$6.4 trillion.
This was attributed to the rise in the Australian dollar, property ownership levels and the commodity boom.
Adnan Kucukalic, Credit Suisse co-head of equities research in Australia, says a progressive tax system and a strong labour market have also contributed to the greater spread of wealth.
“We shouldn’t forget that we are looking at Australia, where almost everything is going as well as it could be, and in America everything is going as badly as it could be,” Kucukalic says.
“Australia is in a wonderful sweet spot. Its growth is linked to China, the currency is strong and employment is good.”
While Australians may be among the world’s richest people, high interest rates and rising living costs are diminishing their purchasing power.
According to a report by Research Now, based on a survey of more than 1,000 consumers, 61% of respondents believe their purchasing power has decreased in the past 12 months.
The survey, conducted on behalf of Growth Solutions Group, shows 50% feel their discretionary spend on non-essential items has declined, while 28% say it has stayed the same.
Of the respondents who say their purchasing power has decreased, consumers aged over 35 are feeling the pinch more than the younger generations.
More than 60% of these respondents blame the cost of living for spending less, while almost half sat they would open their wallets if purchasing power increased.
Graeme Chipp, managing director for Growth Solutions Group, says the survey shows retailers need to hone their marketing efforts.
“There are the young spenders, the ‘middle Australia’ family – handicapped by cost of living increases and very keen to see some mortgage relief and extra cash via lower interest rates – and the mixed spenders and savers at the 65-plus end of the population,” Chipp says.
“What retailers need to be asking… is how they can drill down deeper and think through how to reach that particular percentage of the population that clearly can be enticed to spend more.”
“There are clearly very significant differences between what a 25-year-old wants, expects and is willing to pay and a 45-year-old.”
“The writing is now on the wall in terms of being far, far more targeted in order to reach the consumer who is able and willing to spend.”