The Lucky Country is becoming more and more fortunate by the day, according to Credit Suisse, as its 2021 Global Wealth Report illustrates how and why Australians are the richest people in the world.
The leading global investment bank’s annual research has outlined 1.8 million Aussies are millionaires today based on net household wealth – that’s the value of financial + real assets minus debts – with a projection the local millionaire population will reach approximately 3.1 million by as early as 2025. Currently, Australia has the second-highest density of millionaires (9.4% of total pop.), right behind Switzerland (14.9%).
While both are impressive stats, the title for world’s richest people isn’t exactly owed to either of the above. Rather, the country’s title has been secured by the median wealth per adult figure of US$238,070. Having experienced a US$32,280 increase between 2019 and 2020, effectively, Australia has pulled in front of Belgium (US$230,550), Hong Kong (US$173,770), New Zealand (US$171,620), Denmark (US$165,620), Switzerland (US$146,730), and plenty others for the top spot.
“The Reserve Bank of Australia’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 [share price] and housing market increases across Australia,” says Michael Marr, Head of Private Banking at Credit Suisse Australia.
“The rapid appreciation of the Australian dollar over 2020 has also played a significant role in Australia’s position in the rankings.”
In fact, despite the ongoing pandemic, Australia somehow managed to experience the third-highest increase in millionaires across 2020, minting over 392,000 individuals who are now proud, card-carrying members of the two-comma club. If Credit Suisse’s math is correct – and we’re inclined to believe so – this meanings one in 10 Aussie adults was millionaire in USD; as pointed out by The New Daily, this suggests there are even more millionaires in Australian dollars.
Distribution of wealth, on the other hand, isn’t as great on our part. The very same report indicates Australia is fairly unequal when it comes to sharing the love – something which has most obviously presented itself in the housing market. As property prices and the cost of rent rises, the divide is only growing larger and larger.
“There’s a clear divide between property owners and renters,” APAC economist Callam Pickering explains to The New Daily.
“And I suspect that a large share of Australian millionaires will be people who simply own property in the likes of Sydney and Melbourne.”
In 2007, the Gini wealth inequality index of Australia was 63.4, while the share of the top 1% of adults by wealth was just 19.7%. In 2020, the Gini wealth inequality index climbed up to 65.6, and the share of the top 1% similarly increased to 20.5%.
“This rise in inequality is in line with the moderate increase in financial assets relative to non-financial assets since the former are less equally distributed,” notes Credit Suisse.
“However, wealth inequality continued to fall in New Zealand after 2008. By 2020, its wealth Gini had fallen from the 72 level recorded in 2000 to 69.9, and the share of the top 1% had dropped from 25.4% to 20.3%.”
“The contrast with Australia is explicable in terms of the large drop in the relative importance of financial assets in New Zealand over this period.”
You can check out the full Credit Suisse Global Wealth Report for 2021 detailing macro economic trends here.