Australians the world’s richest people as property prices supercharge wealth

Australians are the wealthiest people in the world with a typical net worth of almost $US274,000 in 2021, just ahead of Belgium, New Zealand and Hong Kong.

Soaring property prices lifted the median wealth per Australian adult by $US28,450 in 2021, according to Credit Suisse’s annual global wealth report, which tracks wealth in 20 countries.

Australia scores first on the median, or typical, wealth per adult, followed by Belgium and New Zealand. When measured by average wealth, Australia is fourth behind Switzerland, the United States and Hong Kong, reflecting that wealth is more evenly distributed in Australia than in those countries.

Rapidly rising house prices during 2021 increased the number of millionaires in Australia.Credit: Peter Rae

Australia had about 2.2 million millionaires (calculated in US dollars) in 2021, up from 1.8 million millionaires in 2020. This increase was the fourth-highest seen globally in 2021. Only seven countries, all with higher populations and bigger economies – the US, China, Japan, Britain, France, Germany and Canada - had more millionaires than Australia last year.

Net worth or “wealth” is defined by Credit Suisse as the value of financial assets plus real estate, including the family home, and includes retirement savings – from which debts are subtracted.

Australian residential property prices rose 23.7 per cent during 2021. From their highs earlier this year, prices are down, nationally, about 3.5 per cent as of August 31. Prices are down 7.4 per cent in Sydney and 4.6 per cent in Melbourne.

The Australian Securities Exchange is down about 10 per cent since the start of the year, and superannuation balances have also fallen, mainly due to the poor performances of shares. Most analysts expect property prices to start to recover in mid to late 2023.

Looking forward, analysts at Credit Suisse expect wealth growth will be somewhat hampered by the Russia-Ukraine war and rising inflation, however, the bank still expects global wealth to increase by $US169 trillion ($252 trillion) by 2026. It also predicts the number of millionaires globally to increase “markedly” to around 87 million.

Michael Marr, head of wealth management at Credit Suisse Australia, says: “Over the next five years, the number of USD millionaires in Australia is expected to increase 35 per cent, from 2.2 million in 2021 to 2.9 million millionaires in 2026.”

“Looking forward, we remain watchful as to the impact of rising inflation, the inevitable increase in interest rates with the knock-on effect on the valuation of the two principal sources of wealth, housing and financial assets, underpinned by GDP [growth].”

Australia’s property market, the source of much of the country’s wealth, also has a grim prognosis, with banks and market-watchers expecting valuations to fall by as much as 20 per cent.