17/10/2007 - 12:46

Australians' personal wealth soars

17/10/2007 - 12:46

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Wealth held by Australians in property, shares and other assets surged to record highs in the past quarter, according to figures released today by the Australian Bureau of Statistics and the Federal Treasury.

Australians' personal wealth soars

Wealth held by Australians in property, shares and other assets surged to record highs in the past quarter, according to figures released today by the Australian Bureau of Statistics and the Federal Treasury.

Federal Treasury and ABS's "Modellers' Database" reveals that Australia's private sector wealth surged 6.1 per cent to a record $8.58 billion in the three months to June 2007.

According to CommSec chief equities economist Craig James the average Australian now has wealth equivalent to just over $408,000, up $22,000 in the past three months.

He said that over the past five years wealth has doubled.

Mr James said the Reserve Bank took this into account and compared with debt levels when considering whether interest rates should rise.

"Australians are not just doing well, they are doing better than previous generations by a country mile," Mr James said. "Once allowance is made for inflation, private sector wealth has doubled in the past five years, a result never before achieved.

"Amazingly, while wealth surged in the latest quarter, debt levels barely budged. Clearly recent rate hikes and talk of more to come has caused consumers to get their financial houses in order."

He said the record-breaking run of the sharemarket has been fuelling the wealth gains of Australians, either through direct holdings of shares or via superannuation.

The Modellers' Database figures coincide with the release of a Boston Consulting Group report, which reveals personal wealth grew faster in Australia than in any other developed country in the five years to the end of 2006.

Much of that wealth was amassed as a result of Australia's compulsory superannuation system, the report found.

Personal wealth measured in US dollars increased by 19.1 per cent annually in Australia over the period.

That rise was more than double the increase in the global average of 8.6 per cent annually.

The BCG report measures and analyses trends in personal wealth in 62 countries.

Personal wealth is defined as personal assets under management, including listed securities held directly or indirectly through managed investments, cash deposits and money market funds.

It excludes wealth attributed to investors' own businesses, residences or luxury goods.

Australia ranked seventh among all countries, behind only the rapidly developing economies of China on 23.4 per cent, Brazil on 22.4 per cent, Hungary on 22.3 per cent, Poland on 22.1 per cent, Slovakia on 22.0 per cent and the Czech Republic on 19.9 per cent.

Matthew Rogozinski, BCG's head of Australian financial services, said the result reflected a combination of strong financial markets and the superannuation system.

"The superannuation system is having a very large effect on the way personal wealth is accumulated in Australia relative to most other countries," he said.

"The net effect has been to substantially increase Australian investors' allocation towards listed securities at the expense of deposits."

The number of millionaire households in Australia, defined as those with at least $US1 million in assets under management, in Australia grew from 110,000 in 2005 to 135,000 in 2006.

But Mr Rogozinski said the growth in personal wealth in Australia in the past year was driven by mass affluent households, defined as those with between $US0.1 million and $US1.0 million in assets under management.

"Australia's personal wealth profile is certainly maturing quickly and is now much closer than just a few years ago to the pattern of the personal wealth distribution seen in `old world' economies," he said.

"This represents an opportunity for financial institutions in Australia to develop new models of servicing the premium and private banking customer segments."

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