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Recent surges in property values have boosted the number of Australian millionaires, but industry experts are concerned that growing generational and income-based inequalities could hinder the long-term market outlook for the property market.
Findings from Finder’s Wealth Building Report for 2024 have underscored the pivotal role of property in driving Australia’s millionaire population, which has increased over the year to approximately 2.8 million and is expected to further rise over the next five years.
The report, based on a survey of 1,008 Australians, found that one in eight respondents are millionaires, comprising 13 per cent of the country’s adult population, which Finder noted is one of the highest proportions globally.
Extrapolating this figure, the report highlighted that much of this wealth is tied to Australia’s property market, with the nation’s households collectively owning nearly $10.5 trillion in residential land and dwellings.
Noting that recent findings from the Australian Bureau of Statistics (ABS) recorded the average Australian household as having a net wealth of $1.58 million, Finder stated that the exclusion of the key asset of property from net wealth calculations slashes the average household net wealth down to $573,252.
As a result of the importance of property to Australian wealth creation, Finder stated that the roughly 2.8 million Australian millionaires as of October 2024, drops down to 1.1 million (5 per cent of the adult population) when the value of a principal place of residence is excluded from net wealth calculations.
Inequalities among survey responses
Nevertheless, Finder highlighted that Australia’s reliance on property has been one of the largest contributors to wealth inequality in the country, with close to 16 per cent of households with more than $100,000 in combined income owning two or more properties, as opposed to just 6 per cent of households with between $50,000 and $100,000 owning two or more properties.
This disparity was also observed on a generational scale, with 10 per cent of Baby Boomers and 13 per cent of Gen X respondents owning two or more properties, as opposed to only 5 per cent of Gen Z respondents.
Due to these conditions, Finder stated that the wealth held by older Australians can have a marked impact on the distribution of equity and capacity for further wealth creation among younger generations who are inheriting their parents’ estates.
Responses to Finder’s survey reflected this notion, with Australian investors being twice as likely than non-investors (16 per cent versus 8 per cent) to have received parental support for a house deposit, alongside 44 per cent of investors receiving financial assistance from their parents, as opposed to just 29 per cent of those without investments.
Commenting on these conditions, Finder’s head of consumer research, Graham Cooke, stated that the removal of “common burdens such as saving for a house deposit” can subsequently “unlock the time and money required to explore other wealth building avenues”.
This viewpoint was also evident in the the 6 per cent of survey respondents who replied that investing in real estate was the factor that contributed the most to their net wealth, with a further look showing 22 per cent of investors reported that they had taken actions to improve or grow their wealth via real estate as opposed to a mere 2 per cent of non-investors.
But even with the increased pathways afforded to investors who are receiving parental assistance, the report noted that home ownership was universally the most popular financial goal among younger Australians, with almost a quarter (24 per cent) of Gen Z selecting home ownership as their main financial goal as opposed to 15 per cent of Millennials and 8 per cent of Gen X.
The changing role of property investment
Highlighting that property has been one of the “largest opportunities for Australians to build wealth over the past 40 years”, Finder pointed to the survey’s findings in stating its conclusion that Australia is “witnessing property transform from a means of wealth creation to the end goal of wealth creation”.
While Finder emphasised that property will continue to play an integral role in Australian wealth creation, the company highlighted property investment’s seeming transition from a “pathway to wealth to the prize of wealth creation” in forecasting that “Australian properties may not provide the mammoth boost to wealth that has been enjoyed over the past 40 years”.
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