Australians’ household wealth has nearly doubled since the GFC thanks to soaring property prices and a growing pool of wealth in superannuation.
The value of Australian-held assets has increased 96 per cent since 2007, faster than the 78.6 per cent increase in debt over the same period, new findings from Roy Morgan research have revealed.
That means net wealth is 98.7 per cent higher than it was in 2007.
“We see daily headlines about the risks posed by high levels of debt and falling property values, but when we drill down into the data, a more balanced long term picture emerges,” Roy Morgan CEO Michele Levine said.
“Although the last 12 months has seen a marginal decline in household net worth, it is important to understand it in the context of the long term trend. What we have seen here is a very positive long term trend.”
“Housing debt has grown considerably since 2007, but not uniformly - Roy Morgan’s data shows wealthier cohorts have shown a much greater propensity to take on debt and those investors have more ability to handle downturns than more marginal borrowers in lower-wealth segments.”
This is reflected in the difference between the median growth and average growth.
While average net wealth per capita is up 28 per cent, median wealth - which is a measurement of the change in the wealth held by those in between the wealthier 50 per cent and poorer 50 per cent - has increased just 8.8 per cent.
“The median value is a more representative metric in such a highly skewed market, as 50% are above it and 50% below, it is the central value,” Roy Morgan explained.
Women have also increased their average net wealth position in comparison to men, with men now holding just 12.3 per cent more wealth than women, down from their 27.4 per cent advantage in 2007.
The growth in wealth is largely down to a strong property market, which made up around 50 per cent of assets, but superannuation also increased from 19.2 per cent to make up 24.4 per cent of Australians’ wealth.
“A more detailed understanding of how debt and personal wealth are distributed can help dispel some of the more simplistic fears over debt, and give a more balanced view of its relationship to wealth creation in Australia over the long term,” Levine said.
While declines in housing values have captured headlines (national housing values are down 6.9 per cent over the year and 8.4 per cent since their peak in 2017), in the 10 years between June 2008 and June 2018, national dwelling values increased a staggering 43.9 per cent.
And in the last month, the property market showed signs its period of decline was slowing, with Sydney and Melbourne recording increases in property values for the first time since 2017.
This increase came as the Reserve Bank of Australia cut the official cash rate to a new low of 1.25 per cent, in an attempt to stimulate the struggling economy and property market.
The Reserve Bank of Australia will make its official call for July later today (2 July) with experts split on whether the bank will pull its main lever again.
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