Australian households’ net wealth up to $8.1 trillion, despite rising debt costs
Combined with the equity in their homes, owner-occupiers hold 94.4% of Aussie households' net wealth.
Australian households have propelled their net wealth substantially over the last four years, according to the latest research, despite the nation's burgeoning household debt being among the highest in the world.
Roy Morgan Research's Superannuation and Wealth Management in Australia report, released in October, found Australian households' increased their net wealth by more than two-fifths (42.1%) over the last four years.
The data shows Australian households net wealth rose from $5.7 trillion in 2013 to $8.1 trillion in 2017.
The findings are based on an extensive study of consumer financial behaviour, including over 50,000 interviews conducted annually. The research evaluated superannuation in the context of all other assets and debts, covering all types of funds including retail, industry, public sector and self-managed super funds (SMSF).
The total value of increased household net worth since 2013 was $2.432 trillion. More than half (57%) of these funds - $1.387 trillion - were a result of significant gains in the equity of owner-occupied homes.
The research reveals a little over half (53.1%) of Australia's overall household net wealth is currently made up of equity in owner-occupied homes. This figure is slightly higher than the 48.1% reported in 2013.
More than a quarter (27.4%) of net wealth comprises super and pensions/annuities, down from 28.6% in 2013.
Other aspects of net wealth, i.e. bank accounts, managed funds and direct investments, fell 3.8% since 2013.
Australians owner-occupiers (65.2%) also hold the greatest value of investments outside of their homes, accounting for 85% of super fund totals, 89.7% of all direct investments and 86.9% of bank deposits.
Combined with the equity in their homes, owner-occupiers hold 94.4% of Australian households' net wealth.
Australian household debt has steadily risen over the past three decades as more people aim to own homes and continue to rely on products such as car loans and credit cards. A global comparison of household debt found Australians rank fourth highest in the world, behind Denmark, the Netherlands and Norway.
Additionally, 2017 has been a financially stressful year for Australians. The Australian Financial Security Authority recently reported that personal insolvencies rose 8% in the September 2017 quarter year-on-year.
The silver lining might be that Australians are getting pretty good at handling personal insolvency, and are utilising a wider range of tools to avoid the consequences and black marks of bankruptcy. Balance transfer cards are a common way of working with seemingly intractable credit card debt, while refinancing your home loan may combat mortgage stress. The process of debt consolidation finance is aiding insolvency agreements.
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