Australian household wealth has surged to unprecedented levels, but this prosperity masks a significant wealth gap. The richest 5 percent of Australians have seen an astounding 86 percent increase in their assets over the past two decades, while the top 20 percent by income have experienced wealth growth four times faster than the lowest quintile during the same period.
This surge in wealth coincided with Australian household wealth reaching a historic high in the June quarter, soaring by 2.6 percent to a remarkable $15.1 trillion, a 3.9 percent annual increase. The per capita wealth also grew by 2.1 percent, equating to $11,442 per person. Property assets constituted about 68 percent of total household wealth at $10.3 trillion, with superannuation assets totaling $3.6 trillion. Additionally, Australians held $1.3 trillion in shares and $1.6 trillion in cash deposits.
Property ownership played a pivotal role in this wealth increase, contributing 2.1 percentage points to the overall quarterly growth. Strong overseas stock market performance and rising employer contributions in a robust labor market boosted superannuation balances. Despite mounting household debt levels due to higher interest rates, net household wealth exceeded debt by more than fourfold by the end of August.
Nevertheless, a recent study by the Australian Council of Social Service (ACOSS) and the University of New South Wales (UNSW) has highlighted a concerning trend of deepening wealth inequality over the past two decades. Between 2003 and 2022, the wealthiest 5 percent saw an 86 percent increase in wealth, compared to just 20 percent growth for the lowest quintile. The top 20 percent now possess an average wealth of over $3.2 million, a stark contrast to the middle 20 percent, and an alarming 90 times more than the lowest 20 percent.
This growing wealth gap can be attributed largely to the exponential growth in superannuation balances, which grew by 155 percent due to compulsory savings. Surprisingly, contrary to the common belief that "mum and dad" investors dominate the property market, the top 20 percent own 82 percent of all investment properties by value, averaging $266,000 in value. They also possess 78 percent of all shares and other financial investments, with an average value of $563,000.
Cassandra Goldie, ACOSS CEO, expressed concerns about unchecked wealth inequality and called for government intervention to address housing and superannuation policies favoring the affluent. Carla Treloar, a professor at UNSW Sydney, emphasized the need for more affordable housing, a fairer tax and superannuation system, and increased permanent income support payments to combat rising wealth inequality.
While Australia ranks favorably in global wealth levels, the report underscores that both income and overall wealth in the country declined in 2022 due to inflation and higher interest rates, highlighting the ongoing importance of addressing wealth disparities and economic stability.