We’re Richer, but More In Debt – Report

Credit Suisse has released the seventh edition of their global annual wealth report. Switzerland retains first place, (down USD 27,000 to USD 562,000), and leads over second-placed Australia (USD 376,000, down USD 5,000).

Piggy-BusinessAustralians are significantly more in debt now – since 2000, average wealth increased only two-and-a-half times whilst household debt quadrupled. In 2016, Australian debt per adult increased to $US98,004, up from $US97,189 the year before. Debt as a percentage of gross wealth increased to 20.7 per cent, up from 20.3 per cent.  The RBA has finally acknowledge high household debt could be a problem.

Using median wealth- which is a measure that gives a better picture of inequality – Australia ($US162,815) also ranked second behind Switzerland ($US244,002) and much better than the USA ($US44,977).

Net worth, or “wealth” , is defined as the value of financial assets plus real assets (principally housing) owned by households, minus their debts. This corresponds to the balance sheet that a household might draw up, listing the items which are owned, and their net value if sold. Private pension fund assets are included, but not entitlements to state pensions. Human capital is excluded altogether, along with assets and debts owned by the state (which cannot easily be assigned to individuals).

The United States (USD 345,000, up USD 3,000), and Norway (down USD 13,000 to USD 312,000) are still in third and fourth place respectively, but New Zealand (USD 299,000, up USD 34,000) has jumped up into fifth, leapfrogging the United Kingdom, where the most significant drops in wealth per adult was experienced (down USD 33,000 to USD 289,000). Canada (USD 270,000, up USD 2,000) drops to ninth place, while Denmark (USD 260,000, up USD 5,000) retains tenth position.

The banks says Australias overall position is “still resilient” and our level of wealth inequality as “relatively low”. They are suggesting wealth could grow by 34 per cent over the next five years.

 

Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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