Soaring house prices in Sydney and Melbourne and strong share markets drove a significant increase in the number of wealthy Australians in 2016.
The number of individuals with US$1 million in assets, excluding their home, rose from 234,000 to 255,000 in 2016, taking Australia to ninth on the list of the world’s largest high net worth populations, according to the latest Capgemini World Wealth Report.
Capgemini Australia banking and capital markets industry practice director Phil Gomm said property values surged, and there was a stronger sense of optimism in equity markets.
“A very significant proportion of their wealth can be attributed back to their equities investment portfolios,” he said.
“Money is now flowing back in to equity.”
Inhibitors to wealth creation included the fiscal deficit, high household debt and government debt levels hitting 45 per cent in 2016, Capgemini said.
“And of course the uncertainty around China’s economy impacting volatility around our commodity prices,” Mr Gomm said.
The number of wealthy individuals has grown globally, with Asia-Pacific the largest market.
Capgemini said the total number of high net worth individuals stands at 16.5 million, with a combined wealth of US$63.5 trillion.
“Its a pretty strong report card for Australia and there’s a sense of optimism that losses incurred during the GFC, where there was a swing back to cash and fixed income products, has been replaced by a move towards equities,” Mr Gomm said.
According to the report, 40 per cent of wealthy individuals in the Asia-Pacific region said their biggest driver of wealth was equities.
Globally, wealthy investors reported an impressive 24.3 per cent return from equity portfolios overseen by wealth managers.
“More than 90 per cent of high net worth individuals cited equities as the most important contributor to their investment performance, and I think that resonates very strongly in our own market,” Mr Gomm said.