Millionaires in Australia

Thanks to the most popular asset class that currently propels the nation along, this is especially true on the eastern seaboard of Australia, more Australians are now able to call themselves millionaires.

The property boom that has showed no real signs of abating with the median house price in Sydney now over a million dollars ($740k USD) has also spilled over into Melbourne and Brisbane.

Residential property is the primary reason for the increased numbers of millionaires in Australia that has grown to more than 1.16 people according to 2017 figures provided by the Credit Suisse Global Wealth Report.

For me this is a real concern, this isn't real income producing assets driving the economy along adding to GDP although the sector is valued at $6.9 trillion at the end of 2017.

Sure, people are employed because of residential property from real estate agents, architects and financiers (130,000 people) to builders including trades such as bricklayers, tilers, plasters, carpenters and electricians (390,000 people).

If residential real estate was such a sound investment class surely large corporations would actively involved? Corporations are involved in the investment of commercial real estate ranging from industrial/warehouse, medical/consulting, office, showroom, retail and hotel/leisure.

They are happy to be involved in financing residential real estate, they build properties, manage properties for clients but want to sell them off to investors as soon as they can, sometimes straight off the plan but they don't want to hold the properties themselves.

From my research I find the percentage of investors in the residential property market was around 20% in the 1980s growing to over 45% but my concern is the debt involved and what happens when the Reserve Bank of Australia finally raises interest rates from historical lows.

I classify millionaires and high net worth individuals somewhat differently. I would class a millionaire in Australia as a person controlling $1 million in assets in local currency; that is of course AUD.

A high net worth individual is valued in USD (approx $1.35 AUD) that does not include their primary residence in net assets, that's investable assets that includes superannuation (retirement savings).

Sure being a residential property millionaire is good if you live in the major centres, but with low wages growth and rising bills, most aren't living like millionaires. It would probably be better if you own the property outright but most seem to now be straying perilously close to negative equity.

So I'm becoming more concerned what will happen if the residential property market deflates and what happens to the families holding these properties. Apparently we are richer but are we really just holding onto overpriced assets in a hot market?