SUMMARY OF FINDINGS


INTRODUCTION

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 details 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 2009-10 Survey of Income and Housing (SIH). Comprehensive information on household assets and liabilities were collected for the first time in the 2003-04 SIH, and again in the 2005-06 SIH. Tables 1 and 2 in this publication show data across the time series.

While there may be individual ownership of assets, the benefits of asset ownership are 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 is available from the publication Household Income and Income Distribution, Australia, 2009-10 (cat. no. 6523.0).


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 2009-10, the mean value of household assets was $839,000. The corresponding value of mean household liabilities was $120,000, resulting in mean household net worth of $720,000 (see table 6).


Assets

Sixty-nine percent of households own their own home either outright or with a mortgage (table 7), and for many of them the dwelling in which they live is their main asset. Owner occupiers' average home value was $531,000. This represented a value of $365,000 when averaged across all households, that is, across both owner occupiers and non-owner occupiers (see table 6). Owner occupied dwellings accounted for 43% of total average household assets for all households (table 9). The average value of household contents was $61,000 (table 6).

Just over 20% of households owned property other than the dwelling in which they lived, including residential and non-residential property for rent and holiday homes (table 8). The value of this property averaged $136,000 across all households (table 6) and accounted for 16% of total household assets (table 9).

Balances in superannuation funds were the largest financial asset held by households, averaging $116,000 per household across all households (table 6). Seventy-five percent of households had some superannuation assets (table 8), but the distribution was very asymmetrical. While the average (mean) value of superannuation for those households was $154,000, half had superannuation assets under $60,000.

In the SIH, the value of own unincorporated and incorporated businesses are measured on a net basis, that is, the value of assets less the value of liabilities. The net value of own unincorporated businesses averaged $23,000 across all households and the net value of own incorporated businesses averaged $40,000 across all households (table 6).


Liabilities

Loans outstanding on owner occupied dwellings were the largest household liability. They averaged $188,000 for owner occupier households with a mortgage, giving them a net value in their dwellings of $333,000. Across all households, the average value of loans outstanding on owner occupied dwellings was $68,000, or 57% of average household liabilities. Loans outstanding for other property averaged $37,000. The principal outstanding on vehicle loans averaged $2,300 per household and the average household credit card debt was $2,600 (table 18).


DISTRIBUTION OF WEALTH

While the mean household net worth of all households in Australia in 2009-10 was $720,000, the median (i.e. the mid-point when all households are ranked in ascending order of net worth) was substantially lower at $426,000 (table 7). This difference reflects the asymmetric distribution of wealth between households, where a relatively small proportion of households had high net worth and a relatively large number of households had low net worth, as illustrated in the following frequency distribution graph (S1).

As shown in table 2, over 1.2 million households (16%) had net worth less than $50,000, with 77,000 of these households having negative net worth (1% of all households).

Another measure of wealth distribution is provided by the net worth shares of groups of households at different points in the wealth distribution. The following graph (S2) shows that, in 2009-10, households in the highest net worth quintile held 62% of the total net worth of all households, while a further 20% was held by households in the 4th quintile. By comparison, the lowest three quintiles held, in total, 18% of total net worth.

Changes in net worth distribution from 2003-04 to 2009-10

In real terms, mean household net worth in 2009-10 ($720,000) was 14% higher than in 2005-06 ($632,000) and 30% higher than in 2003-04 ($555,000) (table S3).

For low net worth households (represented by the lowest quintile), median net worth increased by 9% from 2005-06 to 2009-10. For households with middle net worth (represented by the third quintile), there was a 12% increase in the median value and for the highest net worth households (represented by the top quintile) there was a 13% increase (table S3).

The share of total household net worth owned by households in the lowest net worth quintile has remained at around 1%. In contrast the share of households in the highest net worth quintile has slightly increased, from 59% in 2003-04, to 61% in 2005-06 and 62% in 2009-10 (table S3).

S3. Changes in real net worth distribution, 2003-04 to 2009-10
			2003-04(a)	2005-06	2009-10	Percentage change 2005-06 to 2009-10
Mean household net worth
	Low net worth	$	28 863	30 688	31 829	4
	Middle net worth	$	351 060	383 590	427 168	11
	High net worth	$	1 636 773	1 931 824	2 223 013	15
	All households	$	554 960	631 871	719 561	14
Median household net worth
	Low net worth	$	26 083	27 510	30 000	9
	Middle net worth	$	349 716	381 424	425 502	12
	High net worth	$	1 175 212	1 302 193	1 474 854	13
	All households	$	349 716	381 424	425 502	12
Percentage share received by households
	Low net worth	%	1.0	1.0	0.9	-
	Middle net worth	%	12.7	12.1	11.9	-
	High net worth	%	59.0	61.1	61.8	-
- nil or rounded to zero (including null cells)
(a) In 2009-10 dollars, adjusted using changes in the Consumer Price Index

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 10.9 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 4.4 (table S4).

S4. Selected distribution indicators, Household net worth and gross household income - 2009-10
			Household net worth(a)	Gross household income(a)
Ratio of values at top of selected percentiles
	P90/P10	ratio	49.16	9.14
	P80/P20	ratio	10.93	4.42
	P80/P50	ratio	2.24	1.89
	P20/P50	ratio	0.20	0.43
Percentage share received by households in
	Lowest net worth quintile	%	0.9	12.2
	Middle net worth quintile	%	11.9	17.3
	Highest net worth quintile	%	61.8	31.6
Percentage share received by households in
	Lowest gross income quintile	%	12.6	4.3
	Medium gross income quintile	%	16.1	15.7
	Highest gross income quintile	%	39.8	46.7
(a) Quintile and percentile boundaries are derived separately for household net worth and gross household income. For information about the derivation of quintiles, percentiles and mean values for these data items, see Appendix 1

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. 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 (table S4).

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.

In addition, some households have low or even negative incomes due to business or investment losses, but still have relatively high levels of net worth.

Graph S5 below shows the relationship between equivalised (i.e. standardised with respect to household size and composition) disposable household income and equivalised net worth deciles. The lowest equivalised income decile had a higher mean equivalised net worth ($309,000) than the second to fifth equivalised income deciles. Average equivalised net worth of households in the highest (tenth) income decile was more than double that of households in the ninth income decile ($1,158,000 and $477,000 respectively).

Household characteristics

Households with different characteristics tend to have different levels of net worth, as shown in table 7 of the publication, and summarised in the following table (S6). Low net worth households had lower equivalised disposable household income compared to middle and high net worth households ($579 per week, compared with $752 and $1215 per week, respectively).

High net worth households had the highest incidence of full ownership of their home (61%), whereas 91% of the households in the lowest net worth quintile were renters. High net worth households contained more people on average (2.8) than the low and middle net worth groups (2.4 and 2.5) and more employed persons on average (1.6) compared with low and middle net worth households (0.9 and 1.2, respectively) (table 7).

The household reference person in the high net worth group was older, on average, than the reference person in low net worth households (57 years and 41 years respectively), reflecting that wealth generally accumulates with age.

S6. Household characteristics, Net worth groups - 2009-10
		Low net worth	Middle net worth	High net worth
Mean net worth	$	31 829	427 168	2 223 013
Mean gross income per week	$	1 026	1 462	2 665
Mean equivalised disposable household income per week	$	579	752	1 215
Owns home without a mortgage	%	*0.4	39.4	61.1
Owns home with a mortgage	%	3.8	51.7	34.2
Rents from a private landlord	%	70.2	7.4	3.0
Rents from a state/territory housing authority	%	17.4	**0.1	**0.1
Average number of persons in the household	no.	2.4	2.5	2.8
Average number of employed persons in the household	no.	0.9	1.2	1.6
Average age of reference person in the household	years	41	53	57
* estimate has a relative standard error of 25% to 50% and should be used with caution
** estimate has a relative standard error greater than 50% and is considered too unreliable for general use

Life cycle stages

A typical life cycle includes childhood, early adulthood and the forming and maturing of families, as illustrated in tables 22 and 23 of the publication. Other family situations and compositions are shown in tables 20 and 21. The following table compares households in different life cycle stages (S7).

S7. Net worth and household characteristics, For selected life cycle groups - 2009-10
		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
		'000	no.	$'000	$	%	%
Lone person aged under 35		330.5	1.0	151	1 152	3.5	31.6
Couple only reference person aged under 35		469.1	2.0	237	2 128	1.7	47.0
Couple with dependent children only
	Eldest child aged under 5	446.2	3.4	484	1 953	5.9	57.8
	Eldest child aged 5 to 14	846.8	4.2	747	2 341	10.6	64.1
	Eldest child aged 15 to 24	551.7	4.1	1 206	2 742	23.3	62.6
	Total	1 844.7	4.0	821	2 367	13.2	62.1
Couple with
	Dependent and non-dependent children only	283.3	4.7	892	2 897	22.8	61.3
	Non-dependent children only	473.3	3.3	1 104	2 478	50.4	40.7
Couple only reference person aged 55 to 64		542.4	2.0	1 317	1 584	57.4	32.6
Couple only reference person aged 65 and over		741.6	2.0	1 111	919	84.0	7.3
Lone person aged 65 and over		742.0	1.0	572	485	71.8	4.1
One parent one family households with dependent children		535.2	3.1	276	1 085	11.7	28.2

Of the selected life cycle groups, the group with the highest mean household net worth was couple only, reference person aged 55 to 64 ($1,317,000). Many of these people are either nearing the end of their time in the labour force or have recently retired, that is, they are at the end of the main wealth accumulation period. People over 65 had lower net worth on average ($1,111,000 for couples and $572,000 for lone persons), at least partly reflecting a run-down of assets to support 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 (table S7).

Lone persons aged under 35 had the lowest mean household net worth, at $151,000. The mean household net worth of couple only households with a reference person aged under 35 was $237,000 (or $119,000 per person) (table 22). These couple only households had almost twice the level of mean gross household income of the young lone person household ($2,128 per week compared with $1,152 per week). The mean age of the household reference person in both household types was 28, that is, they had had the same amount of time on average to accumulate wealth (table 23).

One parent, one family households with dependent children had a mean net worth of $276,000, compared to $827,000 for couple family households with dependent children (table 20). Differences in relative age did not contribute significantly to this substantial difference in net worth, since the average age of parent was 41 years for the one parent families and 42 years for couple families. Home ownership for the one parent family households was about half that of the couple family households (40% and 77% respectively) (table 21).


Tenure and landlord type

There is a strong correlation between net worth and home ownership, and for many households, their dwelling is their main asset.

Owners without a mortgage had the highest mean net worth ($1,179,000) which is 64% higher than the mean net worth of all households ($720,000). The mean net value of owner occupied dwellings for this group was $541,000 or 46% of their total mean net worth (table 18).

Owners with a mortgage also had higher mean net worth ($770,000) than the average for all households. This group also had higher liabilities than the average for all households ($263,000 compared with $120,000). Almost three-quarters (72%) of their liabilities were from the principal outstanding on loans for owner occupied dwellings (table 18).

Renters had lower mean net worth ($158,000) which is 22% of the average for all households. Private renters averaged net worth of $176,000, while renters from state/territory housing authorities averaged net worth of $42,000 (table 18).


States and territories

Household net worth varies between states and territories and between capital cities and elsewhere. In 2009-10, South Australian households recorded the lowest mean net worth at $585,000, or 23% below the average for all Australian households (table 30). Melbourne households had a mean net worth of $866,000, 12% above the capital city average of $772,000 (table 26) and 20% above the average for all Australian households of $720,000 (table 30). The mean net worth of $772,000 for capital city households (table 26) was 23% above the mean for households in the remainder of Australia of $629,000 (table 28).

In nearly all capital cities, over half of the value of average household net worth was accounted for by the value of owner occupied dwellings (table 26), as shown in the following graph (S8).