ABOUT THIS PUBLICATION
This publication presents data from the Survey of Income and Housing (SIH) on estimates of household net worth, or wealth, classified by various characteristics, including summary measures of the distribution of household net worth in Australia. Classifications used to describe households include net worth quintile, income quintile, principal source of household income, family composition, tenure type and geographic location. For each category of household, estimates of the various assets and liabilities comprising net worth are provided along with estimates of household income, household size and other characteristics.
EFFECTS OF ROUNDING
Where figures have been rounded, discrepancies may occur between sums of the component items and totals. Published percentages are calculated prior to rounding of the figures and therefore some discrepancy may exist between these percentages and those that could be calculated from the rounded figures.
For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Rajni Madan on Canberra (02) 6252 7457.
SUMMARY OF FINDINGS
The economic wellbeing of individuals is largely determined by their command over economic resources. People's income and reserves of wealth provide access to many of the goods and services consumed in daily life. This publication provides indicators of the components and distribution of household net worth, or wealth.
The estimates of net worth in this publication are derived from the value of households' assets less their liabilities as collected in the 2003-04 Survey of Income and Housing (SIH).
While there may be individual ownership of assets, the benefit of asset ownership is shared at least to some extent between members of the household. Therefore this publication presents estimates of household wealth along with estimates of household income and other characteristics of households.
Further information on household income and expenditure is available from the following publications: Household Income and Income Distribution, Australia, 2003-04 (cat. no. 6523.0) and Household Expenditure Survey, Australia: Summary of Results, 2003-04 (cat. no. 6530.0).
The 2003-04 SIH was integrated with the 2003-04 Household Expenditure Survey (HES) and the combined data can be used to analyse relationships between household income, wealth and expenditure. Appendix 4 of this publication presents a study of the wealth and expenditure of low income households.
COMPOSITION OF WEALTH
Wealth is a net concept and measures the extent to which the value of household assets exceeds the value of their liabilities. In 2003-04, the mean value of household assets was $537,000. The corresponding value of average (mean) household liabilities was $69,000, resulting in average household net worth of $468,000 (see table 6).
70% of households own their own home outright or with a mortgage, and for many of them the dwelling in which they live is their main asset. Owner occupiers' average home value was $355,000. This represented an average value of $249,000 when averaged across all households, that is, across both owner occupiers and non-owner occupiers (see table 14). Owner occupied dwellings therefore accounted for 46% of total average household assets for all households. The average value of household contents was $47,000.
Nearly 20% of households owned property other than the dwelling in which they live, including residential and non-residential property for rent and holiday homes. The value of this property averaged $71,000 across all households and accounted for 13% of total household assets.
Balances in superannuation funds were the largest financial asset held by households, averaging $63,000 per household across all households. Nearly 75% of households had some superannuation assets, but the distribution was very asymmetrical. While the average (mean) value of superannuation for those households was $87,000, half had superannuation assets under $35,000.
In the SIH, the value of own unincorporated and incorporated businesses is measured on a net basis, that is, the value of assets less the value of liabilities. The net value of own unincorporated businesses averaged $16,000 across all households and the net value of own incorporated businesses was $23,000.
Loans outstanding on owner occupied dwellings were the largest household liability. They averaged $113,000 for owner occupier households with a mortgage, giving them a net value in their dwellings of $238,000. Across all households, the average value of loans outstanding on owner occupied dwellings was $40,000, or 58% of total household liabilities. Loans outstanding for other property averaged $20,000, that is, half the amount outstanding for loans on owner occupied dwellings. The principal outstanding on vehicle loans averaged $2,700 per household and average household credit card debt was $1,900.
DISTRIBUTION OF WEALTH
While the mean household net worth of all households in Australia in 2003-04 was $468,000, the median (i.e. the mid-point when all households are ranked in ascending order of net worth) was substantially lower at $295,000. This difference reflects the asymmetric distribution of wealth between households, where a relatively small proportion of households had relatively high net worth and a large number of households had relatively lower net worth. As can be seen in the following graph, 17% of households had net worth falling between -$50,000 and $50,000, of which less than 1% had negative net worth (see table 3 in the main body of the publication). Fewer and fewer households fell into each $100,000 net worth range above $50,000.
1.1 DISTRIBUTION OF HOUSEHOLD NET WORTH, 2003-04
Wealth and income
The range of wealth levels is wider than the range of income levels, as can be seen by analysing percentile ratios. For example, the value of P80 for household net worth (i.e. the level of net worth dividing the bottom 80% of all households from the top 20%) was 10.4 times higher than the P20 for household net worth (i.e. dividing the bottom 20% from the rest). The corresponding P80/P20 ratio for gross household income was 4.2. Similarly, the 20% of households comprising the lowest net worth quintile accounted for only 1.0% of total household wealth, while the 20% of households comprising the lowest gross income quintile accounted for 4.5% of total income.
Wealth is distributed between households somewhat differently to income. While the 20% of households comprising the lowest net worth quintile accounted for only 1% of total household net worth, they accounted for 12% of total gross household income. And the 20% of households comprising the lowest gross household income quintile accounted for 4% of total gross household income but 13% of total net worth.
The differences in the distribution of wealth and income partly reflect the common pattern of wealth being accumulated during a person's working life and then being utilised during retirement. Therefore many households with relatively low wealth have relatively high income, especially if they are younger households. Conversely older households may have accumulated relatively high net worth over their lifetimes but have relatively low income in their retirement.
Life cycle stages
A typical life cycle includes childhood, early adulthood and the forming and maturing of families, as illustrated in tables 18 and 19. Other family situations and compositions are shown in tables 16 and 17. The following table compares households in different life cycle stages.
1.3 Net worth and household characteristics for selected life cycle groups, 2003 -04
Number of households
Average number of persons
Mean household net worth
Mean gross household income per week
Proportion owning home without a mortgage
Proportion owning home with a mortgage
|Lone person aged under 35 |
|Couple only, reference person aged under 35 |
|Couple with dependent children only |
|Eldest child aged under 5 |
|Eldest child aged 5 to 14 |
|Eldest child aged 15 to 24 |
|Couple with |
|Dependent and non-dependent children only |
|Non-dependent children only |
|Couple only, reference person aged 55 to 64 |
|Couple only, reference person aged 65 and over |
|Lone person aged 65 and over |
|One parent, one family households with dependent children |
|* estimate has a relative standard error of 25% to 50% and should be used with caution |
Of the groups included in the table, the group with the highest mean household net worth was couple only, reference person aged 55 to 64, with a value of $895,000. Many of the people in this group are either nearing the end of their time in the labour force or have recently retired from the labour force, that is, this age group is at the end of the main wealth accumulation period for most people. People over 65 had less net worth on average ($714,000 for couples and $437,000 for lone persons), at least partly reflecting a run-down of assets to provide consumption in retirement. These older cohorts may also have had less opportunity for capital accumulation in earlier decades, for example, because women had lower participation rates in the paid work force.
Lone persons aged under 35 had the lowest mean household net worth, at $94,000. At $226,000, the net worth of couple households with a reference person aged under 35 was somewhat more than twice the net worth of single persons in the same age group. The couple households also had slightly more than twice the level of mean gross household income ($1584 per week compared to $730 per week). The mean age of persons in both households was 28, that is, they had had the same amount of time on average to accumulate wealth.
One parent, one family households with dependent children had a mean net worth of $158,000, compared to $518,000 for couple family households with dependent children (table 17). Differences in relative age did not contribute to this substantial difference in net worth, since the average age of parent was 39 years for the one parent families and 40 years for couple families. Home ownership for the one parent family households was only about half that for the couple family households (39% and 79% respectively).
States and territories
Average net worth varies between states and territories and between capital cities and elsewhere. In 2003-04, Tasmanian households recorded the lowest mean net worth at $325,000, or 31% below the average for all Australian households. Sydney households had a mean net worth of $641,000, 27% above the capital city average of $504,000 and 37% above the average of $468,000 for all Australian households. The mean net worth of $504,000 for capital city households was 24% above the mean of $405,000 for households in the remainder of Australia.
In nearly all capital cities, over half the value of average household net worth was accounted for by the value of owner occupied dwellings, as shown in the graph. There was considerably greater variation between capital cities in dwelling values than in other net worth.
1.4 MEAN NET WORTH, By capital city
The wealth and expenditure of low income households
Appendix 4 of this publication analyses the relationships between the wealth, income and expenditure of households in order to get a better understanding of the characteristics of households at the lowest end of the income distribution.
In 2003-04, average expenditure by households in the lowest income decile was higher than the average expenditure by households in the second income decile. The difference was, in part at least, because households within the lowest income decile had higher average net worth than households in the second income decile. As might be expected, the households with relatively higher net worth also had relatively higher expenditure, even when they had similar income levels. In addition, the gap between expenditure and income was markedly greater for households that owned an unincorporated business or rental property but had low income, strongly suggesting that these households had access to economic resources other than income, such as lines of credit.
Since the average level of expenditure of households in the lowest income decile was higher than that of households in the second income decile, it can be expected that the households in the lowest income decile had a higher average standard of living than the households in the second income decile.
However, it needs to be emphasised that nearly half the people living in households in the lowest income decile who did not own an unincorporated business or rental property were also in the lowest net worth quintile and had mean expenditure lower than the corresponding households in the second income decile. These people were likely to have had lower average standards of living than people in households in the second income decile. They predominantly relied on government pensions and allowances as their principal source of income and rented their dwellings. Lone person households were the most common households in this population, with over half being lone persons under 65 years of age. The next largest category was one parent families with dependent children.
It also needs to be emphasised that some households with low income that had their own unincorporated business or rental property would not have had access to other economic resources and would also have had low standards of living.