Australians are richer than ever before on paper — but that doesn’t mean everyone is better off

Australians are $6 trillion richer than before the pandemic — on paper — as new numbers show how inflation and the housing affordability crunch have shaped the nation’s distribution of wealth.

The lucky country was luckier than ever before in the March quarter as household net worth passed $17.3tn, according to the latest tally by the Australian Bureau of Statistics.

Home and land values dominated the growth, surging by $4tn to nearly $11tn. Superannuation balances lifted 27 per cent to $4.1tn.

Both are assets, and so the values are much higher than national income — measured by GDP — because they accumulate over many years.

Yet the numbers also showcase how the stimulus-fuelled inflation bubble has generated gains in some parts of the country more sharply than others.

The contrast highlights the distortionary impact that comes with inflation.

Assets were resilient to the cost of living pressure, with the S&P-ASX200 up 27 per cent since the start of 2020 and home prices surging 49 per cent, according to Proptrack.

But wages are about 5 per cent lower in real terms than early 2020 while renters are forking out about 19 per cent more, ABS data shows.

Recent analysis by bank UBS found median wealth — the person in the middle of the pack — in Australia was the second-highest in the world.

Only the small European financial hub of Luxembourg ranked better.

Yet more than half of Australians’ riches were parked in real estate, leaving the nation more exposed to the property market than almost any other country.

UBS Global Wealth Management Australian chief of investments Andrew McAuley said rising house prices had boosted wealth for middle Australians at a faster rate than the top 1 per cent in recent years.

That had contributed to a rise in “everyday millionaires” as average home values in major cities soared past $1 million.

Nearly two million Australians were paper millionaires in US dollar terms, Mr McAuley said.

“Wealth has increased to the point now you could be sitting next to an everyday millionaire on the bus,” he said.

Mr McAuley said wealth was more evenly distributed in Australia than most other developed countries, with the key measure of inequality — called a gini coefficient — 6th lowest out of 32 nations.

CEDA chief economist Cassandra Winzar said getting more Australians into home ownership would be crucial amid concerns an increasing number of people may not ever get into the property market.

“What’s really driving wealth now is home ownership,” she told The Nightly.

“If you haven’t been able to get into home ownership, trying to rent is really really challenging.”

Ms Winzar said economic reform was becoming more urgent and backed in the Federal Government’s hopes to refresh the system to be less reliant on income tax. So was boosting housing supply by cutting red tape.

“If we don’t change something up, we’re at risk of entrenching this inequality,” she said.

The biggest windfalls since 2020 have been delivered at the feet of Treasurer Jim Chalmers and his state-level counterparts.

Dr Chalmers’ March budget expects tax receipts this financial year will be 50 per cent higher than before the pandemic.

That was boosted by a wave of company tax payments driven by a resources boom in Western Australia. It now increasingly also reflects rising personal tax payments due to bracket creep.

That means inflation is pushing Aussies into paying higher tax rates on their earnings, even when they are not better off.

Federal Government spending was also set to hit the highest proportion of the national economy in almost four decades, at 27 per cent.