Inequality excites and divides

Ian Rogers
Michele Levine, wealth inequality research entrepreneur, found the bottom 50 per cent of Australians share 3.7 per cent of total wealth.
Personal net wealth in Australia has increased in real terms, per capita, by 30.5 per cent over the ten years to 2017, the debut edition of the Roy Morgan Wealth Report has found.

The report provides a fresh view on debates around inequality and may help inform banks' analysis of target credit profiles and their business models.

Drawing on data from its long-running and detailed household surveys, Roy Morgan Research tread into analysis that is more often the domain of universities and think tanks, often informed by the Household, Income and Labour Dynamics in Australia (HILDA) surveys, a now 18 year old project of The Melbourne Institute.

Michele Levine, CEO of Roy Morgan, wrote that one object of this work was to examine "how the balance between debt and net-wealth changed over time," with a focus in this report on the decade since the onset of the financial crisis.

Strong gains in overall net wealth in Australia "have not been evenly distributed" the report observes.

The top 10 per cent of the population has increased its share of net wealth in Australia from 46.8 per cent in 2007 to 48.3 per cent in 2017.

By contrast, the bottom 50 per cent now account for 3.7 per cent of total wealth, down from 3.9 per cent in 2007. The average net wealth in the top decile is now over $2.014 million dollars, up by 71.6 per cent from $1.174 million in 2007.

In a chapter on Personal Wealth and Debt, Roy Morgan's report looks at data of keen interest to all in the credit supply chain.

Owner-occupied homes are, as ever, the main component of personal assets with A$4.96 trillion or 51.9 per cent of all personal assets, though this is down from 52.4 per cent in 2007, on the Roy Morgan modelling.

Superannuation forms the second largest part of wealth, estimated in this report at $2.1 trillion or 21.8 per cent of the total, up from 19.6 per cent in 2007.

Property investments represented 10.7 per cent and deposit/transaction accounts with 6.6 per cent of personal wealth.

Areas with "decreasing shares of wealth" Roy Morgan listed as managed funds, pensions/annuities and other direct investments.

The aggregate personal debt of Australians Roy Morgan estimated at $1.2 trillion in 2017, a rise of 76 per cent over 10 years, but lower than the increase in the value pf personal assets, which were up by 92 per cent in this study.
?Adjusting for inflation and population growth, the 2017 per capita debt estimate of $60,400 increased by 18 per cent per capita from $40,500 in 2007.

Personal loans (2.1 per cent of aggregate consumer debt), other loans (1.3 per cent) and credit cards (0.7 per cent), were "all showing declining shares over the decade," the report says.

Owner occupied mortgages accounted for 67.6 per cent of personal debt in 2017, while mortgages on investment properties represented 28.4 per cent of debt.

The highest growth rate, the research found, was for mortgages on investment properties at 111 per cent.

"All major loan categories showed at least minor growth except for 'other loans' which had a small decline."