Australia ranks 14th in global wealth table

Australia takes 14th place in the global wealth table, with net financial assets per capita of €99,400 ($155,727), Allianz says, though its debt ratio is the second highest worldwide, at 125.8%.

New Zealand placed 7th, with €132,170 ($207,067) in assets per capita.

Households in the two countries hold €1.9 trillion ($2.98 trillion) of liabilities, almost all mortgage debt, the insurer’s latest global wealth report says.

That reflects “the burden that construction and housing prices have placed on household balance sheets,” with Australians shouldering €67,220 ($105,312) of liabilities per capita on average, 95% of which is in mortgage debt.

“Housing prices and debt are high and rising, pushed up not only by owner-occupied loan commitments, but also by investors,” the report said.

In New Zealand – where house prices saw the largest increase in the world last year, jumping 23% – the liabilities per capita amount to €32,000 ($50,133), of which 89% is mortgages.

“The demand for housing has been on the rise, owing to low interest rates, rising savings and the shift towards more remote work since the pandemic,” Allianz said.

Globally, household wealth is poised to decline by around 2% this year in a “turning point” after more than a decade of annual growth, it says. Average growth of financial assets is expected to slow to 4.6% a year until 2025 – down from 10.4% in the past three years.

“Monetary tightening is squeezing economies and markets – household wealth will feel the pinch,” the global wealth report said. “In real terms, households will lose a tenth of their wealth,” it said, noting higher food and energy prices and borrowing costs.

Private households in Australia and New Zealand held €5.3 trillion ($8.3 trillion) of financial assets last year, at 2.2% of global wealth.

The compound annual growth rate between 2010 and 2021 of private households’ gross financial assets in Australia and New Zealand was 7.5%, compared with a global average of 7.1%. Last year’s growth annual growth was 10.6%.

Australia’s gross financial assets per capita sit at €166,630 ($261,054) – more than Italy, Austria, Germany, France, Ireland, Norway, Japan, Belgium, Israel, the UK and New Zealand.

Allianz says because of strong asset price growth, the liability-to-net-asset-ratio in Oceania has improved significantly over a decade to 59%, from 98% in 2011. Net financial assets grew 12.5% while liabilities grew 7.5% annually in the last decade.