It’s official – Australians have overtaken the Swiss to have the highest median wealth in the world.
According to the 2018 Credit Suisse Global Wealth Report, the median or “middle” level of wealth (assets minus debts) held by Australian adults is $269,787 (US$191,453).
Switzerland has a higher “average wealth” than us as because of a few ultra-high net worth individuals who skew the figures.
But the report shows that collectively Australians have amassed “net worth” of almost $14.6 trillion. This includes assets worth $18.0 trillion, minus liabilities worth $3.4 trillion.
Now I know that 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 saying “that’s not me – that’s the 1%”.
However what they forget is that compared to the rest of the world – they are the 1%!
Yet despite our wealth we’re suffering a crisis of confidence.
It’s much the same with property
Many Aussie home buyers and property investors are worried.
Last year they had a fear of missing out on the rising property prices and today its a fear of buying too early, worrying that prices will drop further.
Too many investors are making their decisions based on the media – not on the fundamentals – forgetting four key points:
- 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.
- We’re not building enough dwellings to accommodate all the new households and, other than in Perth and Sydney, vacancy rates are at all time lows.
A lot of our wealth has to do with super and property
According to the Credit Suisse report, the average wealth per adult in Australia has increased to $579,320, 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 cent per annum.
Plus, about 60 per cent 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 other Western residents.
While some Australians might not feel wealthy, on a global comparison rate, this report proves that they are.
The report also found that wealth is more evenly distributed in Australia than other comparable countries with only six per cent of our adult population having a net worth below $14,093.
On the other hand, in the UK, that figure is 18 per cent and in the US, it is 28 per cent.
The proportion of Australians with wealth above $140,933, at 67 per cent, 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 one per cent of global wealth holders, which represents 3.2 per cent, even though Australia is home to only 0.4 per cent of the world’s adult population.
What does it all mean?
If you ask me this research is just further proof that we really are ‘the lucky country’.
Not only do we have one of the highest proportions of home ownership in the world, 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 also keen to improve their financial futures.
No longer are they satisfied with simply paying off the mortgage on their home or naively hoping that they will be happy to merely survive on the pension when they retire.
Rather, they are opting to take charge of their finances today, and those that have historically fared the best often took action when everyone else was sitting on their hands worrying about all the bad news.
They recognised that 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.
Australia is punching above its weight
I have no doubt that is one of the reasons why Australia is now punching well above its weight on the world wealth stage.
And I have no doubt that 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 that 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.
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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