Wealth

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Despite global wealth growth of 2.6% during the past year, Australia's wealth per adult fell $USD 28,670, largely due to exchange rate effects and the falling Australian dollar, according to the latest Global Wealth Report from Credit Suisse.
They found that the composition of household wealth in Australia is skewed toward non-financial assets, which average $USD 275,420 and form 58% of gross assets. The high level of real assets reflects a large endowment of land and natural resources relative to the population, but also high property prices in the largest cities.
Therefore due to the recent fall in property values, that has in turn caused a decline in the per capita wealth of Australians, when factoring in exchange rates it is close to its 2011 level of $USD 384,640.
Despite the exchange rate effects, Australia’s wealth per adult is fourth highest in the world in US dollars. In terms of median wealth, it ranks second after Switzerland.
However the decline in average wealth in Australia still resulted in 124,000 fewer millionaires.
<img src="https://www.urban.com.au/images/2019/10/22/Aussie%20Wealth.JPG" alt="">
Credit Suisse said, "the proportion of those with wealth above USD 100,000, at 66%, is one of the highest in any country and about six times the world average. With 1,307,000 people in the top 1% of global wealth holders, Australia accounts for 2.6% of this top slice, although it is home to just 0.4% of the world’s adult population."
"Household wealth in Australia grew quickly between 2000 and 2012 in USD terms, except during 2008. The average annual growth rate of wealth per adult was 12%, with about half due to exchange-rate appreciation against the US dollar. The exchange-rate effect went into reverse after 2012, with the Australian dollar declining 33% relative to the US dollar."
"Notably only 7% of Australians have net worth below USD 10,000. The latter figure compares with 17% in the United Kingdom and 27% in the United States," they concluded.
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j.ballantyne1990-6AQqhLzZaK

124,000 fewer Australian millionaires due to property dip and the lower $AUD

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GUEST OBSERVATION
Australia’s super rich are richer than ever, but not like they used to be.
Since the surprise re-election of the Coalition, there has been renewed debate about the role the “aspirational” Australian played in the final outcome. The debate is taking place against the backdrop where income inequality has been growing in most developed countries over the past half-century, including in Australia.
Bureau of Statistics figures released on Friday show that the wealth of Australia’s wealthiest households has grown <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0%7E2017-18%7EMain%20Features%7EKey%20Findings%7E1" target="_blank">much faster</a> than the wealth of the rest.
<hr>
Household net worth by quintile (top fifth to bottom fifth)
<a href="https://images.theconversation.com/files/284287/original/file-20190716-173351-ydebm9.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/284287/original/file-20190716-173351-ydebm9.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
AUD millions, top quintile is the wealthiest 20% of households. <a class="source" href="https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0~2017-18~Main%20Features~Key%20Findings~1" target="_blank">ABS 6523.0</a>
<hr>
Over the course of the 20th century, income equality has been U-shaped, a point noted by French economist <a href="https://theconversation.com/is-pikettys-capital-in-the-twenty-first-century-really-the-most-unread-bestseller-67713" target="_blank">Thomas Piketty </a> and Australia’s Productivity Commission.
In Australia, the income share of the top 1% peaked at 14% in 1950, then fell to a low of 5% in the early 1980s before climbing again to 9% by 2015.
Wealth inequality has also followed a long term U-pattern, and in many countries wealth is even more concentrated than income.
The Productivity Commission finds that in Australia, a person at in the top 10% of wealth distribution has <a href="https://www.pc.gov.au/research/completed/rising-inequality" target="_blank">40 times</a> as much wealth as a person in the bottom 10%. That person has four times as much income.
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Income shares of the top 1%, by country
<a href="https://images.theconversation.com/files/283954/original/file-20190713-173334-1sivwtw.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/283954/original/file-20190713-173334-1sivwtw.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a>
Per cent of unequivalised gross taxable income earned by the top 1% of adult income earners, 1913 to 2013. <a class="source" href="https://www.pc.gov.au/research/completed/rising-inequality/rising-inequality.pdf" target="_blank">Productivity Commission, 2018</a>
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In a paper to be presented to the Australian Conference of Economists in Melbourne on Tuesday, my colleague Monica Jurin and I shed light on wealth inequality over the past three decades through the lens of Australia’s super rich – the richest 200 households and families.
The super rich are changing
<a href="https://images.theconversation.com/files/283918/original/file-20190713-173355-1exi30j.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/283918/original/file-20190713-173355-1exi30j.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt=""></a> 
<a class="source" href="https://www.afr.com/rich-list" target="_blank">The BRW/AFR Rich List, updated since 1984</a>
Based on the <a href="https://www.afr.com/rich-list" target="_blank">Rich List</a>, compiled by the Business Review Weekly since the 1980s, and now updated annually by the Australian Financial Review, we examine the importance of inherited wealth versus entrepreneurship among Australia’s super rich.
The Rich List confirms the rise in wealth inequality. In 2019, the richest 200 families accounted for 3.6% of the aggregate net worth of all Australian families, up significantly from 2.3% in 1989.
But the importance of inherited wealth appears to have diminished.
Those with inherited wealth and family businesses today make up one-third of the super rich, well below 43% in 1989, with a gradual decline over each of the past three decades. Inherited wealth by itself accounts for 37% of the Rich List’s net worth today, well below 55% in 1989.
The emergence of technology entrepreneurs such as <a href="https://www.afr.com/rich-list/how-the-rich-invest-mike-cannonbrookes-20180605-h1107b" target="_blank">Mike Cannon-Brookes and and Scott Farquar</a>, founders of software company Atlassian, stand out.
Today, the technology sector accounts for almost 8% of the Rich List’s net worth, compared to almost none in 1989.
The results seem somewhat less egalitarian when we examine whether those on the list have appeared on it before.
They’ve more persistence, less inheritance
For instance Frank Lowy, co-founder of Westfield, is considered to be self made. But once on the list, he remained on in each of the four decades we examined.
Whatever the sources of one’s entry to the Rich List, members like Mr Lowy provide evidence of persistence. Conditional on being on the list a decade earlier, members have a slightly higher probability of remaining on it than they did in 1999, controlling for death and other factors.
Our findings complement those of <a href="https://www.aeaweb.org/articles?id=10.1257/aer.103.3.158" target="_blank">Steven Kaplan and Joshua Rauh</a> who observe similar patterns in the <a href="https://www.forbes.com/forbes-400/#332701f57e2f" target="_blank">Forbes 400</a> list in the US.
Here, and in the United States
They find that inherited wealth has become less important and being college educated has become more important.
In Australia we find that a substantially higher share of the richest individuals are tertiary qualified today than they were in 1989, but we are reluctant to draw strong conclusions because the entire society has greater access to tertiary education than it did in 1989.
The super rich have occupied a unique place in modern Australian culture since the emergence of conspicuous entrepreneurs and the emergence of the Rich List in the 1980s.
They are changing, and probably in a good way, even as inequality is growing.

<hr>
Salvatore Ferraro, Lecturer, RMIT University
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/inequality-is-growing-but-it-is-also-changing-as-australias-super-rich-evolve-119925" target="_blank">original article</a>.
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Inequality is growing, but it is also changing as Australia's super rich evolve: Salvatore Ferraro

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The value of assets held by Australians has almost doubled over a 12 year period, a new report has found. 
From 2007 to 2019, asset values are up 96%, while debt has increased by 78.6% over the same period, according to the <a id="LPlnk178519" href="http://icm-tracking.meltwater.com/link.php?DynEngagement=true&amp;H=btYXC68syxmDVppbhVzFoYHdeMNV9070xvOlf%2FNdDQ0wXj6aidRhm%2BU%2B3pvvHdsrpvIIhgT9m2JwAuxVME0Zp2SQWJMw%2Fl0vyvX5XpPY4CpJ8TwkzTJoFeV9rdYJuyfe%2FYEc7gWVJ%2B0%3D&amp;G=0&amp;R=https%3A%2F%2Fstore.roymorgan.com%2Fproduct%2FRoy-Morgan-Wealth-Report-13397&amp;I=20190711015504.00000194d375%40mail6-114-ussnn1&amp;X=MHwxMDQ2NzU4OjVkMjU4OWEyYzVkZmE3ZjMyZjJjYTFiZTs%3D&amp;S=iwIWS64fklsraWL5xgm3auOxsrFdtkaHt3FvSlv0LBQ" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">Roy Morgan Wealth Report</a>. 
Over this period, which covers the period from just before the start of the global financial crisis, net wealth has increased by 98.7%.
Even after accounting for population growth and inflation, the average Australian is better off, the report said. 
The report is drawn from over half a million in-depth face-to-face interviews conducted in Australians’ homes over the period from 2007 to 2019.
The second edition of the Wealth Report focuses how net wealth has changed since just before the onset of the global financial crisis.
Australia performed very strongly over the past 12 years compared with other OECD nations – particularly in Europe where many nations went backwards over the same period, it said. 
Key findings of the report include:
<ul>
<li>The value of assets held by Australians has almost doubled from 2007 to 2019 (up 96.0%). This is faster than the increase in debt of 78.6% over the same period. As a result net wealth is now 98.7% higher in 2019 than it was in 2007. 
</li>
<li>Average per capita net wealth in real terms (adjusted for inflation), is 28.0% higher than it was in 2007 just before the onset of the global financial crisis. 
</li>
<li>Median net worth per capita in 2007 was only $124,000, rising to $135,900, up 8.8% after allowing for inflation. The median value is a more representative metric in such a highly skewed market, as 50% are above it and 50% below, it is the central value. 
</li>
<li>Women have improved their average net wealth position relative to men, with males now holding an average of 12.3% more wealth than women, while in 2007, they had a much higher 27.4% advantage. 
</li>
<li>Roughly half Australia’s personal wealth continues to be held in the form of owner occupied housing (49.8%), down slightly from 51.6% in 2007, while superannuation assets make up an increasingly higher portion, rising from 19.2% to 24.4% of our wealth since 2007. 
</li>
<li>The following chart shows that the average personal assets are now worth 8.1 times average debts, compared with 7.4 times debts in 2007. </li>
</ul>
Assets have grown faster than debt
<a href="https://www.propertyobserver.com.au/images/2019/7/11/roy%20morgan.png" target="_blank">Click here</a> to enlarge:
<img src="https://www.urban.com.au/images/2019/7/11/roy%20morgan.png" alt="">
 
Source: Roy Morgan Single Source (Australia) 12 months to March 2019, n = 51,362; 12 months to December 2007, n = 54,212. Base: Australians 14+.
"We see daily headlines about the risks posed by high levels of debt and falling property values, but when we drill down into the data, a more balanced long term picture emerges," said Michele Levine, the CEO of Roy Morgan.
"Although the last 12 months has seen a marginal decline in household net worth, it is important to understand it in the context of the long term trend. What we have seen here is a very positive long term trend.
"Housing debt has grown considerably since 2007, but not uniformly - Roy Morgan’s data shows wealthier cohorts have shown a much greater propensity to take on debt and those investors have more ability to handle downturns than more marginal borrowers in lower-wealth segments.
"A more detailed understanding of how debt and personal wealth are distributed can help dispel some of the more simplistic fears over debt, and give a more balanced view of its relationship to wealth creation in Australia over the long term."
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Australians’ net wealth has nearly doubled since GFC: Roy Morgan Wealth Report 

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EXPERT OBSERVATION
Aussie wealth remains elevated, but has eased back from record highs due to falling home prices.
But in a positive development, total household wealth (net worth) stabilised in the March quarter after the biggest fall in a decade in the December quarter. The Aussie sharemarket is acting as a wealth ‘buffer’ against the property downturn. In the March quarter, the S&amp;P/ASX200 index rose by 9.5 per cent – the strongest gain in 9½ years.
Foreigners have increased their allocation to Aussie listed shares this year. Foreign ownership of Aussie shares was hovering near 4-year highs at 31.3 per cent in the March quarter, up from 30.9 per cent in the December quarter.
The weaker value of the Aussie dollar against the greenback, a desire for iron ore exposure, attractive dividend yields, solid payout ratios and likely further interest rate cuts have boosted demand for Aussie shares. And the local sharemarket’s relatively defensive composition when compared to its China supply-chain exposed peers in Asia have made the ASX200 an attractive proposition as the global ‘chase for yield’ re-intensifies.
Looking ahead, Aussie per capita wealth is expected to consolidate around $400,000 after significant gains over the past five years, should home valuations continue to moderate. But property prices appear to have flattened in Sydney and Melbourne in June amid tentative signs of stabilisation.
And it remains to be seen whether the ASX200 index, up almost 18 per cent so far this year, can continue its blockbuster run towards record highs, especially with the company ‘confession season’ and earnings reporting season ahead in August.
Aussie share valuations look a little stretched with the Best Price/Earnings ratio straddling 3-year highs at over 17 times earnings.
And earnings per share growth is modest outside of the resources sector, but continued monetary and fiscal stimulus will continue to act as a support. Business confidence and investment is also expected to lift given greater policy certainty following the election. But trading conditions remain challenging given slowing domestic demand and US-China trade tensions.
Click <a href="https://www.propertyobserver.com.au/images/2019/6/27/Commsec%20shares.JPG" target="_blank">here</a> to enlarge.
<img src="https://www.urban.com.au/images/2019/6/27/Commsec%20shares.JPG" alt="">
What do the figures show?
Financial Accounts:
Total household wealth (net worth) rose by 0.2 per cent to $10,242.6 billion in the March quarter after falling by 2.1 per cent to $10,225.9 billion in the December quarter. The record-high figure for household wealth was $10,422.3 billion in the September quarter of 2018. Over the year to March, net worth fell by 0.7 per cent.
In per capita terms, wealth fell by $1,512 in the March quarter to $404,556 following a record $9,993 decline in the December quarter – the third consecutive quarterly decline.
The Bureau of Statistics noted: “The increase in household wealth in the March quarter was driven by real (inflation adjusted) holding gains on financial assets, offset by holding losses on residential real estate.”
The percentage point contributions to the change in household wealth in the December quarter, include:
Land and dwellings detracted 1.5 percentage points;
Financial assets contributed 1.8 percentage points;
Financial liabilities detracted 0.2 percentage points.
Households held a record $1,160.7 billion in cash and deposits at the end of March. Cash and deposit holdings represented 21.5 per cent of financial assets, down from 22.1 per cent in the December quarter and below the 21.8 per cent average since the global financial crisis and long-run average of 21.7 per cent.
Households held $1,015.7 billion in shares or 18.8 per cent of all financial assets in the March quarter, down from 18.9 per cent in the December quarter, but below the 19.3 per cent average since the global financial crisis and the long-run average of 22.6 per cent.
Pension fund (superannuation fund) assets rose by $119.9 billion to a record-high $2,320 billion in the March quarter. Cash and deposits stood at 10.6 per cent of financial assets, below the 12.9 per cent average since the global financial crisis, but above the long-term average of 9.4 per cent.
Foreigners held $604.8 billion of Aussie listed sharesin the March quarter, up from $548.1 billion in December, but below the record-high of $612.9 billion in the September quarter. Foreigners held 31.3 per cent of total listed shares – near 4-year highs - but slightly below the 31.6 per cent average since the global financial crisis and long-term average of 32.8 per cent.
What are the implications for interest rates and investors?
As evidenced by today’s wealth report, the Reserve Bank will be hoping that Aussie shares and bonds will continue to do the ‘heavy lifting’, shielding households from the downside risks associated with the property downturn, slow wages growth and the potential loss of momentum in the jobs market.  
Aussie bonds have been a strong performer over the year to May 31, up by 9 per cent (Bloomberg Australian Composite Bond Index 0+ Years), as government bond yields have fallen to record lows. Australia’s AAA sovereign credit rating and solid fiscal position has made sovereign bonds an attractive destination for risk averse investors.
But Aussie shares have been a star global outperformer, with the S&amp;P/ASX300 Accumulation Index up 10.9 per cent, ahead of global shares at 8.9 per cent (MSCI World Net Index) over the year to May 31 - an attractive proposition for foreigners seeking yield in a low growth, interest rate and inflation environment.
CommSec expects another rate cut in the next few months due to spare capacity in the labour market and economy.
RYAN FELSMAN is a Senior Economist at CommSec
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Foreign holdings of Aussie shares hits 4-year high: CommSec's Ryan Felsman

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EXPERT OBSERVER
Westpac expects falling house prices to see a significant ‘wealth effect’ drag on Australian consumer demand this year and next. However, the exact nature and size of this effect remains a major area of uncertainty. What does the latest evidence show?
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For a start, the housing correction is starting to have a clearer impact on the household balance sheet. Latest data shows the total value of dwelling assets fell $270bn over 2018, reflecting both lower prices and slower additions to the dwelling stock. The decline amounts to 40% of a year’s income. Relative to income that is about half the size of the peak to trough falls seen in the GFC and 2011-12 correction.
Recall that the ‘signature’ of a wealth effect drag is a fall in net worth accompanied by a rise in the savings rate, the latter meaning that spending is growing at a slower pace than incomes. Also recall that the shock effect should be confined to states experiencing material price declines (NSW, Victoria and WA).
Westpac compiles estimates of household net worth and savings rates by state based on a range of annual and quarterly benchmarks. These ‘indicative’ estimates show, as expected, considerably larger falls in net worth in NSW and Vic with declines closer to 60% of annual income. They also highlight the extent of the prior run up with net worth in both states still well above 2015 levels.
On savings, the estimates point to declines in NSW and Vic consistent with a wealth effect boost to spending rather than a drag. Any hint of a turn in Q1 will be a key pointer to how this effect may play out.
However even before that there are some clues of a shift coming through in the composition of spending. In a detailed article on wealth effects in its March Bulletin, the RBA set out empirical estimates of the size of this effect noting that the effect appeared to be more pronounced for particular spending categories: namely, vehicles, durables and other discretionary items. A composite measure of growth in ‘wealth sensitive’ items already shows a swing to outright declines in per capita spending. While the weakness still looks to be fairly mild to date it is more pronounced in NSW, Vic and WA.
MATTHEW HASSAN is a Senior Economist for Westpac
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Matthew_Hassan-HHWHptmrw4

The wealth effects, the latest evidence: Westpac's Matthew Hassan

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Australian household balance sheets are seeing significant shifts that are likely to restrain demand and are a key risk to the domestic outlook, according to Westpac's latest Red Book.
In particular, a prospective ‘wealth effect’ drag on demand stemming from the decline in house prices is a major area of uncertainty. 
Given the importance of this issue, Westpac economists will be providing more regular updates going forward.
For the most part this will be building on previous commentary profiling trends by state, looking at consumer sentiment during previous wealth effect episodes, sizing the current wealth decline, and providing some sensitivity analysis around potential wealth effects.
<img src="https://www.urban.com.au/images/2019/4/18/Redbook%20Wealth%20Effect%201.JPG" alt="">
(Source: Westpac)
The housing correction is starting to have a clearer impact on the household balance sheet.
The total value of dwelling assets fell $270bn over 2018, reflecting both lower prices and slower dwelling completions.
The decline amounts to 40% of annual income and is about half of the peak to trough falls seen in the GFC and 2011-12 correction.
While the overall decline in net worth, including other assets, is a touch milder than our early estimates it has clearly extended into 2019.
Chart 14 shows Westpac estimates of household net worth and savings rates by state updated to Q4.
<img src="https://www.urban.com.au/images/2019/4/18/Redbook%20Wealth%20Effect%202.JPG" alt="">
(Source: Westpac)
Recall that the ‘signature’ of a wealth effect drag is a fall in net worth accompanied by a rise in the savings rate, the latter meaning that spending is growing at a slower pace than incomes.
Also Westpac noted that these estimates are compiled from a range of annual and quarterly benchmarks, and as such should be treated as broadly indicative. 
The latest estimates show larger falls in net worth in NSW and Vic where declines are closer to 60% of annual income. That said, they also show the extent of the prior run up with net worth in both states still well above 2015 levels. 
On savings, the latest data again points to declines concentrated in NSW and Vic consistent with a wealth effect boost to spending rather than a drag. Any hint of a turn in Q1 will be a key pointer to demand.
The Wealth effect has been seen to have supported demand over 2013-17.
Falls in wealth are less likely to impact when the labour market is strong and income growth is firm.
The latest spending detail shows a clear slowing in wealth-sensitive items, slightly more so in NSW, Vic and WA.
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Wealth effect drag appears imminent: Westpac

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A nice comparison of prime real estate prices around the global cities, via Knight Frank.
Sydney falls roughly on a par with Shanghai, Beijing, and Paris, as measured in US dollar terms.
Melbourne is far cheaper in terms of its prime real estate... more of a Mumbai.
<img src="https://3.bp.blogspot.com/-NYVaBetnTSI/XIII_VoRo7I/AAAAAAAAu34/vfa3Oy8P9csz-5G_62oJWMU6xnj-R7opACLcBGAs/s640/IMG_0728.PNG" width="494" height="640" data-original-height="1600" data-original-width="1237">
I've discussed this phenomenon with some high profile fund managers and analysts before, including at the Sydney market peak in 2017. 
Their view was that Sydney's prime real estate locations weren't unusual on a global benchmark, but the further west you travelled, the more irrationally expensive the market seemed. 
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pwargent-M4siyDbqQY

Prime residential real estate prices in Sydney on a par with Shanghai, Beijing, and Paris

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Over the next five years, Australia’s population of ultra-high net-worth individuals (UHNWI) is set to steadily rise, says a new report.
The UHNWI population is expected to rise by 20% - an extra 600 ultra-wealthy people – compared to 18% growth over the past five years, according to Knight Frank's Wealth Report.
Australian UHNWI population growth was 4% in 2018 to 3,060 UHNWIs.
New data found the number of ultra-wealthy people in Australia (those with net assets of US$30 million or more) is expected to rise by 20% over the next five years, equivalent to an extra 600 ultra-wealthy people.
According to Knight Frank’s Head of Residential Research, Australia Michelle Ciesielski: “GlobalData WealthInsight predicts the number of UHNWIs globally will rise by 22% over the next five years to 2023 – so an extra 43,000 ultra-wealthy people – taking the global number to nearly 250,000. This growth was 4% in 2018 to stand at 198,000 UHNWIs.
“Locally, UHNWIs are projected to rise by 20% over the next five years – equating to an extra 600 ultra-wealthy people living in Australia – in comparison with 12% growth over the past five years. In 2018 alone, we saw the Australian UHNW population grow by 4% to currently stand at 3,060 UHNWIs.”
<img src="https://www.urban.com.au/images/2019/3/6/KF%20Wealth.JPG" alt="">
Knight Frank’s Head of Residential, Australia Sarah Harding said: “Globally, Australia remains one of the top destinations for ultra-high-net-worth individuals. For example, we know Chinese and South-East Asian buyers continue to look at familiar global markets, such as Sydney, Melbourne, London and Hong Kong, which offer language advantages and immigration possibilities, as well as remaining outside any trade disputes.
“According to Knight Frank’s Attitude Survey, almost half of UHNWIs in Australia saw the most significant increase in wealth in 2018, with 93% of the wealth advisors surveyed reporting an improvement in their clients’ fortunes and 72% expecting their clients to increase their wealth in 2019.
“Across Australia’s major cities, GlobalData WealthInsight predicts a fairly consistent rise in ultra-wealthy populations. Sydney and Brisbane’s UHNW populations are expected to rise by 20% over the next five years, while Melbourne and Perth are forecast to rise by 21%.”
Ciesielski said: “Global wealth creation will remain constant in 2019. Although growth was good in 2018, it was not able to replicate the outstanding performance of equity markets, prime property and luxury investments a year earlier.
“There are headwinds looming with potential moderation in wealth growth, with global political and economic concerns becoming more complex. There is increased uncertainty and upheaval with all eyes on the rising trade tensions between China and the US.
“Despite this, 2019 will still see the number of millionaires (those with net assets of US$1 million or more) exceed 20 million for the first time ever. Some 6.6 million of these individuals will be based in North America, with 5.9 million in Europe and a further 5.8 million in Asia.”
According to Ciesielski, globally, the high-net-worth individual (HNWI) population is projected to rise by 19% over the next five years – equating to an extra 3.8 million millionaires – compared with growth of 13% over the past five years.
“This growth was 3% in 2018 to record 19.9 million HNWIs globally,” said Ciesielski.
“In Australia, the HNW population is projected to rise by 18% over the next five years – equating to an extra 60,000 millionaires – compared with growth of 9% over the past five years. In 2018, we saw growth of 3% to register a total 330,000 HNWIs.
“There will be challenges over the coming year, but we’re also going to see opportunities for private individuals and corporations to create wealth by delivering a wide range of public goods – most prevalent in countries without clear political leadership.”
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Australia’s ultra-wealthy population set to rise by 20%: Knight Frank

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The number of people with US$500 million or more in net assets in Asia is going to overtake North America in the next five years, according to new research.
Knight Frank’s The Wealth Report analyses the population of the super wealthy, which is terms ‘demi-billionaires’.  
According to wealth data specialists Wealth-X, the amount of demi-billionaires based in Asia is set to rise to nearly 3000 in the next five years pushed by strong economic growth and rising asset prices.
However, in terms of country, the US will still dominate this segment of the population with its current tally of 1,830 set to rise to nearly 2500 in the next five years.
<a href="https://www.propertyobserver.com.au/images/2018/9/7/wealth-spotlight.jpg" target="_blank">Click here to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/7/wealth-spotlight.jpg" alt="">
Australiasian demi-billionaires are also set to increase 29% from 70 to 90 by 2022, says Knight Frank’s Head of Residential Research, Australia Michelle Ciesielski.
“The methodology for projecting this increase looks at GDP growth, the performance of equity markets and other investments, as well as wealth distribution trends. Currency also plays a significant role.
“The continued increase in wealth in Australasia is being encouraged by stronger local economic conditions and performance of property investments over the past several years. In addition, international drivers including equity and bond performance has spurred on confidence.”
Wealthy investors are driving the demand for prime property, with Australia a top target, says Knight Frank’s Head of Residential, Australia Sarah Harding.
“We need to look on this global platform to truly appreciate the level of sophistication expected by the world’s wealthiest, including where they spend and invest; where they enjoy their downtime; and where they educate their children – now, and in the future.
“For the first time, Australia is delivering super-prime projects like One Barangaroo in Sydney and The Muse in Melbourne to the market – on par with world-class developments in established global cities such as London and New York.”
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Australasian demi-billionaires to increase by 29% over next five years

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Three Australian cities have made the top 20 for global prime residential price growth in a new international residential property report.
Knight Frank’s Prime Global Cities Index – Q2 2018 tracks prime residential prices, defined as the top 5% of the housing market, across 43 global cities worldwide. 
Sydney, Melbourne and Brisbane came in at 15th (5.7% prime price growth), 17th (5.4%) and 20th place (3.4%) respectively in the report, with Perth just coming in 23rd place (2.7%).
Overall the index increased by 2.6% in the year to June 2018, with Guangzhou topping the list of cities with 11.9% price growth.
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<img src="https://www.urban.com.au/images/2018/8/29/cities.png" alt="">
Knight Frank’s Head of Residential Research, Australia, Michelle Ciesielski said that the Australia’s prime residential market continues to perform well compared to its international comparisons.
“Despite a cooling mainstream market off the back of tighter lending practices, the prime market this quarter has continued to be resilient with buyers less impacted by these measures,” Ciesielski said.
The firm linked the growth in ‘ultra-wealthy people’ (defined as those with net assets of US$50 million or more) to price rises in the market segment.
Australia’s ultra-wealthy population swelled by 9% in 2017 – taking the population to 1,260, with a combined worth of US$269 billion, the report said.
More people are set to enter the category in the near future, said Knight Frank’s Head of Residential, Australia, Sarah Harding.
“Prime properties are dependent on increasing wealth flows, taking away the reliance the mainstream market has on income growth,” Harding said.
“Over the next five years, Australia’s ultra-wealthy population is projected to increase by 37%.
“We are seeing more of our prestige buyers seeking their second and third homes, not for income-producing purposes.
“This has resulted in these buyers not releasing a property to market before buying another, limiting the number of prime opportunities.”
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