SUMMARY OF FINDINGS


INTRODUCTION

This publication provides details of the components and distribution of household net worth, or wealth. Wealth is an important component of household economic wellbeing. The economic wellbeing of individuals is largely determined by their command over economic resources. Income and wealth are the economic resources that households use to support their consumption of goods and services. Wealth may be used to support current consumption or retained to support future consumption.

The estimates of net worth in this publication are derived from the value of households' assets less their liabilities, as collected in the 2011-12 Survey of Income and Housing (SIH). Comprehensive information on household assets and liabilities was collected for the first time in the 2003-04 SIH, and again in 2005-06 and 2009-10. 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, 2011-12 (cat.no. 6523.0).


LEVEL OF WEALTH

In real terms the value of mean household net worth in 2011-12 was $728,000 which is not statistically different from the value of mean household net worth in 2009-10 ($759,000). However the value of mean household net worth in 2011-12 ($728,000) is 9% higher than in 2005-06 ($667,000) and 24% higher than in 2003-04 ($585,000) (table 1).


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 2011-12, the mean value of household assets was $858,000 (table 6). The corresponding value of mean household liabilities was $130,000, resulting in the mean household net worth of $728,000 (table 6).


Assets

Owner occupied properties were the largest asset held by households, accounting for 43% (table 9) of household assets and represents a value of $370,000 (table 6) when averaged across all households. For owner occupiers without a mortgage, the average dwelling value is $546,000 (table 18). Just under 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 $129,000 across all households (table 6) and accounted for 15% of total property assets (table 9).

Balances in superannuation funds were the largest financial asset held by households, averaging $132,000 per household across all households (table 6). Eighty percent of households had some superannuation assets (table 8), but the distribution is asymmetrical, with the third net worth quintile having a mean of $65,000 (table 6), reflecting the relatively small number of households with high superannuation balances and the relatively large number of households with zero or low superannuation balances.

In the SIH, the values 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 $21,000 across all households and the net value of own incorporated businesses averaged $28,000 across all households (table 6).


Liabilities

Loans outstanding on owner occupied dwellings were the largest household liability. They averaged $204,000 (table 18), for owner occupier households with a mortgage, giving them an average net value for their dwellings of $347,000 (table 18). Across all households, the average value of loans outstanding on owner occupied dwellings was $75,000, or 57% of average household liabilities. Loans outstanding for other property averaged $42,000. The average credit card debt for all households was $2,700 (table 6). Credit card debt was similar across the net worth quintiles with the second ($3,100) and fifth ($3,200) net worth quintile having similar levels of average credit card debt.


DISTRIBUTION OF WEALTH

While the mean household net worth of all households in Australia in 2011-12 was $728,000, the median (i.e. the mid-point when all households are ranked in ascending order of net worth) was substantially lower at $434,000 (table 7). This difference reflects the asymmetric distribution of wealth between households, where a relatively small number 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).

The asymmetric distribution of wealth can also be seen in table 2 which lists the number and percentage of households in selected net worth ranges. Table 2 shows that over 1.2 million households (14%) had net worth less than $50,000, with 114,000 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 2011-12, households in the highest net worth quintile held more than 60% of the total net worth of all households, while a further 21% 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 2011-12

The share of total household net worth owned by households in each of the net worth quintiles has not changed significantly from 2009-10 to 2011-12. However, the share of net worth held by the second, third and fifth quintiles has changed for the period 2003-04 to 2011-12 (table 1). The share of net worth held by the second net worth quintile has decreased from 6.0% in 2003-04 to 5.2% in 2011-12 (table 1). Also the share of net worth held by the third net worth quintile has decreased from 12.7% in 2003-04 to 12% in 2011-12, and the share of net worth held by the highest net worth quintile has increased from 59.0% in 2003-04 to 60.8% in 2011-12 (table 1).

S3. CHANGES IN REAL NET WORTH DISTRIBUTION, 2003-04 to 2011-12
			2003-04(a)	2005-06	2009-10	2011-12	Percentage change 2009-10 to 2011-12
Mean household net worth
	Low net worth	$	30 439	32 389	33 564	31 205	-7
	Middle net worth	$	370 230	404 851	450 360	437 856	-3
	High net worth	$	1 726 151	2 038 900	2 344 423	2 215 032	-6
	All households	$	585 264	666 894	759 030	728 139	-4
Median household net worth
	Low net worth	$	27 508	29 035	31 646	29 600	-6
	Middle net worth	$	368 813	402 565	448 842	434 234	-3
	High net worth	$	1 239 386	1 374 370	1 555 752	1 594 626	3
	All households	$	368 813	402 565	448 842	434 234	-3
Percentage share received by households
	Low net worth	%	1.0	1.0	0.9	0.9	-3
	Middle net worth	%	12.7	12.1	11.9	12.0	1
	High net worth	%	59.0	61.1	61.8	60.8	-2
(a) In 2011-12 dollars, adjusted using changes in the Consumer Price Index

Wealth and income

The distribution of wealth shows greater variability when compared to the distribution of incomes. This can be seen by analysing percentile ratios. The net worth of the households at the top of the 80th percentile was 11.6 times higher than the net worth of the households at the top of the 20th percentile (i.e. the ratio of the value of the top of P80 to the value at the top of P20). The corresponding P80/P20 ratio for gross household income was 4.5 (table 1).

S4. SELECTED DISTRIBUTION INDICATORS, Household net worth and gross household income - 2011-12
			Household net worth(a)	Gross household income(a)
Ratio of values at top of selected percentiles
	P90/P10	ratio	53.87	9.06
	P80/P20	ratio	11.61	4.45
	P80/P50	ratio	2.36	1.90
	P20/P50	ratio	0.20	0.43
Percentage share received by households in
	Lowest net worth quintile	%	0.9	12.1
	Middle net worth quintile	%	12.0	17.4
	Highest net worth quintile	%	60.8	31.3
Percentage share received by households in
	Lowest gross income quintile	%	12.4	4.3
	Middle gross income quintile	%	16.4	15.7
	Highest gross income quintile	%	36.8	46.5
(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 vales for these data items, see Appendix 1

Wealth is distributed between households somewhat differently to income. While the households in the lowest net worth quintile accounted for less than 1% of total household net worth, they accounted for 12% of total gross household income. The households in the lowest gross household income quintile accounted for 4% of total gross household income but 12% 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 ($300,000) than the second and third 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 ($1,067,000 and $472,000 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 ($637 per week, compared with $824 and $1303 per week, respectively).

High net worth households had the highest incidence of home ownership without a mortgage (59%), 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 (2.3 and 2.5) and more employed persons on average (1.5) compared with low and middle net worth households (0.9 and 1.2, respectively) (table 7).

The average age of the household reference person was older in the high net worth group (57 years) compared to the middle net worth group (54 years) and the low net worth group (41 years), reflecting that wealth generally accumulates with age.

S6. HOUSEHOLD CHARACTERISTICS, Net worth groups - 2011-12
		Low net worth	Middle net worth	High net worth
Mean net worth	$	31 205	437 856	2 215 032
Mean gross income per week	$	1 121	1 606	2 894
Mean equivalised disposable household income per week	$	637	824	1 303
Owns home without a mortgage	%	* -	37.0	59.0
Owns home with a mortgage	%	4.0	53.0	36.0
Rents from a private landlord	%	69.0	8.0	3.0
Rents from a state/territory housing authority	%	17.0	** -	-
Average number of persons in the household	no.	2.0	3.0	3.0
Average number of employed persons in the household	no.	1.0	1.0	2.0
Average age of reference person in the household	years	41	54	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
- nil or rounded to zero (including null cells)

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 - 2011-12
		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		300.6	1.0	160	1 080	*2.4	30.8
Couple only, reference person aged under 35		470.4	2.0	259	2 543	*1.1	43.4
Couple with dependent children only
	Eldest child under 5	482.2	3.4	459	2 314	3.7	60.8
	Eldest child 5 to 14	859.8	4.2	803	2 523	9.4	62.3
	Eldest child 15 to 24	546.7	4.1	1 134	2 606	23.2	60.9
	Total	1 888.7	4.0	811	2 494	11.9	61.5
Couple with
	Dependent and non-dependent children only	272.5	4.7	1 020	3 143	23.9	58.2
	Non-dependent children only	504.8	3.3	1 174	2 742	44.5	44.6
Couple only, reference person aged 55 to 64		518.2	2.0	1 266	1 857	55.1	34.2
Couple only, reference person aged 65 and over		796.0	2.0	1 189	1 021	82.1	8.2
Lone person aged 65 and over		801.5	1.0	623	542	71.9	4.8
One parent one family households with dependent children		503.9	3.1	251	1 210	7.3	29.2
* estimate has a relative standard error of 25% to 50% and should be used with caution

Of the selected life cycle groups, the group with the highest mean household net worth was couple only, reference person aged 55 to 64 ($1,266,000). 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 ($1,189,000 for couples and $623,000 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 $160,000 (table 23). The mean household net worth of couple only households with a reference person aged under 35 was $259,000 (table 22). These couple only households had more than twice the level of mean gross household income of the young lone person household ($2,543 per week compared with $1,080 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 $251,000, compared to $833,000 for couple family households with dependent children (table 21). 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 (37% and 75% 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 ($1,237,000) which is 70% higher than the mean net worth of all households ($728,000). The mean net value of owner occupied dwellings for this group was $546,000 or 44% of their total mean net worth (table 18).

Owners with a mortgage also had higher mean net worth ($790,000) than the average for all households. This group also had higher liabilities than the average for all households ($288,000 compared with $130,000). Almost three-quarters (71%) of their liabilities were from the principal outstanding on loans for owner occupied dwellings (table 18).

Renters had lower mean net worth ($160,000) which is 22% of the average for all households. Private renters averaged net worth of $179,000, while renters from state/territory housing authorities averaged net worth of $43,000 (table 18).


States and territories

Household net worth varies between states and territories. In 2011-12 Tasmanian households recorded the lowest mean net worth at $601,000, or 17% below the average for all Australian households (table 30). Canberra (ACT) households had a mean net worth of $930,000, 19% above the capital city average of $781,000 (table 26) and 28% above the average for all Australian households of $728,000 (table 30). Household net worth was also higher in capital cities compared to other areas. The mean net worth of $781,000 for capital city households (table 26) was 22% above the mean for households in the remainder of Australia of $638,000 (table 28).