I've read these reports the last few years. The only reason that Australia is technically the richest country on earth is because much of the "wealth" is tied up in outrageously priced real estate; a property bubble if you will.
Abbott's playing with fire fucking up the economy the way he has so far. Australia doesn't seem to realise how precarious it's financial position is. Car industry gone. Renewables getting kicked in the dirt. Unemployment at 10 year highs. Coal going down the drain. You get multiple things like that happening and it won't take much to burst the real estate bubble.
Over the 14 years since the turn of the century, Credit Suisse calculates household wealth in Australia grew at an average annual rate of 11%, despite the GFC.
That sounds impressive, but there are caveats to consider before popping the champagne. First, the report notes that ‘the composition of household wealth in Australia is heavily skewed towards real assets, which … form 60% of gross household assets. This average level of real assets is the second highest in the world after Norway. In part, it reflects a large endowment of land and natural resources relative to population, but it is also a result of high urban real estate prices.’ In other words, Australia’s impressive wealth is not entirely from enterprise, diligence and genius. The authors don’t say ‘property bubble’, but they are thinking it.
Second, a significant part of that growth – about a third, in fact – is due to exchange rate appreciation. And just in the last few weeks, since data for the report was collected, the Aussie dollar has fallen from above 94 US cents to below 87. Will that fall continue, or be reversed?
And finally, stock holdings are greater in Australia than most other countries which renders wealth per adult more vulnerable to share price fluctuations. In recent weeks, also since sourcing data for the report, the ASX all ordinaries have tumbled in value to the lowest point in seven months. more
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