Australian households are getting richer, despite booming mortgage debt and record levels of household debt, new research has shown.
But the divide between home owners and renters is becoming starker, with home owners holding 94 per cent of all household wealth.
The annual survey of household net wealth by research house Roy Morgan has shown that the net assets of Australian households has risen 42.6 per cent to $8.13 trillion over the four years to June 2017.
Over the same period household debt has risen by 11.2 per cent to $1.18 trillion, Roy Morgan found.
The total increase in household net worth in Australia since 2013 was $2.432 trillion (from $5.703 trillion to $8.135 trillion). The biggest slice of that increase was accounted for by the booming housing market with equity in owner-occupied homes soaring 57 per cent to $1.387 trillion.
That big jump in housing equity saw the relative position of housing in overall net household wealth rise to 53.1 per cent, up from 48.1 per cent in 2013.
Roy Morgan works out its figures from its extensive household surveys and they differ somewhat from official Reserve Bank figures. The RBA found that net household wealth grew by 43.8 per cent, almost the same as the Morgan finding.
However official figures found that total household debt rose 29 per cent to $1.8 trillion. However, given that both surveys reported net debt rises to be about the same, the story on overall wealth growth is similar.
Despite the growth in superannuation accounts as the super system matures, growth in the system, at 36.8 per cent, was considerably slower than housing.
“This makes it very likely that for some years to come, retirement funding will need to come from household resources outside of superannuation,” said Roy Morgan director Norman Morris.
The survey also painted a stark picture of the property wealth divide. “Although people living in owner occupied homes account for only 65.2 per cent of the population, they hold 85.0 per cent of the total funds in superannuation, 89.7 per cent of all direct investments and 86.9 per cent of bank deposits,” the report said.
“These assets, combined with the equity in their homes, results in them holding 94.4 per cent of total households’ net worth. This leaves those who are non-home owners (34.8 per cent of the population) with only 5.6 per cent of the total,” Mr Morris said.
“Those people not in their own home have not made up for it by investing elsewhere, as shown by the fact that they have less in other investments compared to home owners,” he said.
“There are clearly two groups in Australia when it comes to household wealth and its rate of increase: those who own or are paying off their home and those who are not,” Mr Morris said.
“The rapid rise in home values in Australia over the last few years has left those who are not owner-occupiers well behind in their share and level of household net wealth,” he said.
Indeed, the attractiveness or ability of people to save and invest outside superannuation and home ownership seems to be waning with investments in that category rising by 19.6 per cent, the lowest of any category.
The “other” investments components of net wealth include bank accounts, managed funds (excluding superannuation) and direct investments in things like shares and property.
While net wealth is growing, overall debt levels are worrying many observers, with RBA figures showing that Australian households owed debt equal to 190 per cent of their yearly disposable income in the March quarter – an all-time high.