Who wants to be a millionaire? Almost one in 10 Australians already are

Australia has become a land of McMillionaires. We’re now top of the global rich list — at least by one measure in an annual study by investment bank Credit Suisse — with the median level wealth for adults now at $A315,380, edging out Belgium.

Twenty years ago less than 1 per cent of Australians were millionaires - today it is almost one in ten, according to Credit Suisse’s annual Global Wealth Report. In the past year alone almost 400,000 Australians joined this now not-so-exclusive cohort. With 9.4 per cent of Australian adults millionaires, the nation ranks behind only Switzerland (15 per cent) for millionaire density, and ahead of the United States (8.8 per cent).

The report forecast that in four years the number of millionaires in Australia would rise by 70 per cent to 3.1 million - only slightly shy of one quarter of the adult population. Unlike some other wealth surveys, Credit Suisse’s figures include the value of owner-occupied houses, but it also takes into account an individual’s debt and measures net (rather than simply gross) assets.

Australia - the land of McMillionaires.Credit: Janine Barrett

International growth rates for millionaires are generally high with an expectation from Credit Suisse that the numbers will swell by 49 per cent across the board. But Australia will add to the tally faster than Britain, where numbers are predicted to rise by 50 per cent, and the US, in which millionaire members are expected to increase by 28 per cent over the same period.

The number of people joining the millionaires’ club in Australia is running at such a rate that it has almost taken the cachet out of what was once a financial status symbol.

If a new measure of rich is membership of the ‘very high net worth individual’ club - or people with $US50 million ($A66 million) assets - then Australia can now boast 3262.

Australia’s elevation to the number one spot in median wealth this year has a lot to do with the appreciation of our dollar against the US greenback and is assisted by our superior relative economic performance.

But we also have property prices and growth in financial assets - mainly superannuation - to thank for the wealth creation over a longer term period.

Australia recorded the fourth-fastest house price growth out of the world’s advanced economies over the past 20 years, according to the Organisation for Economic Co-operation and Development.

The median value of a home in Sydney reached $1.3 million this year and Melbourne isn’t far behind at over $974,000.

And economists predict house prices will continue to rise in 2021 and 2022, with the Commonwealth Bank looking at values increasing 16 per cent over that period.

Meanwhile over the past 20 years Australian superannuation funds have returned 6.7 per cent annually.

Head of private banking at Credit Suisse Australia Michael Marr said Australia’s massive improvement in personal wealth over the period to 2025 “will be driven by the ongoing performance of our two principal sources of wealth, housing and financial assets, underpinned by robust GDP growth”.

He warned of the risks of signs of inflation and an inevitable increase in interest rates and the knock-on effect this will have on the housing market.

But Credit Suisse also assigned some credit to the Australian government’s response to COVID. “Once the pandemic hit Australia in the first quarter of 2020, Governments responded quickly with policies to keep the economy from slowing,” the investment bank says in the report.

“The RBA’s lowering of interest rates in conjunction with other Central Banks across the world was probably the biggest contributor to Australia’s performance in the Global Wealth rankings in 2020, fuelling equity and housing market increases across Australia”.

Australia’s relative wealth improvement has not been a recent event.

Twenty years ago Australia was number 14 in wealth rankings, so it has clearly outpaced the rest of the world in individual wealth creation.

There is a range of opinions on the near term performance of global equity markets but Credit Suisse has baked in a 7.2 per cent increase per annum over the next five years.

While equity market growth around the world feeds the growth in wealth of all developed countries, Australians have been relatively larger beneficiaries of stronger equity markets thanks to compulsory superannuation.

And while the proportion of personal debt has also risen over that 20 year period it has not increased anywhere near the increase in the size of our assets, according to the Global Wealth Report.

Australia ranked fourth in mean wealth at $A640,852 per adult. The difference was largely as a result of the averages being skewed by a small number of extremely wealthy people in the US, Hong Kong and Switzerland.

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