Households are getting wealthier but the divide between rich and poor is growing: KPMG
Make us a preferred source
Make us a preferred source on Google
The news: Australia’s wealth gap has widened over the five years to 2024-25, with average household wealth rising 23.6% in real terms to $1.56 million from $1.26 million. Median household wealth remained unchanged at $700,000.
The new figures from KPMG Australia show that, since Covid, there has been a growing wealth divide. Prior to the pandemic wealth was rising at relatively even rates across all households.
The numbers: Between 2014-15 and 2019-20 median wealth increased 11%, from $633,000 to $701,000 while average wealth climbed by about 10%.
Households in the “average” category, with net wealth between $300,000 and $900,000, are in decline. This group covered a third of households in 2014-15 and is now under 28% of households with KPMG saying this is a “redefinition” of what has typically been considered “average” wealth.
At the same time, households with net wealth from $900,000 to $1.6 million are seeing a 3.4% rate of growth and now accounts for one in five households, boosted by housing equity. And households with net wealth of $1.6 million and above make up 22% of households, up from 15% a decade ago.
The share of lower-wealth households, defined as a net worth below $300,000, has declined to 31% from 34% over the last decade. It typically includes young people, pensioners without property assets and those on income support.
But there is a growing divide between those stuck in this lower-income bracket and wealthier households.
The data points to a growing concentration of wealth and a more uneven economic landscape. Intergenerational fairness is a hot topic ahead of the federal budget.
What they said: “During the pandemic interest rates sat at near zero which fuelled a sharp increase in asset values, particularly property,” KPMG urban economist Terry Rawnley said.
“Households that already had property or were able to get on the ladder during that time are now reaping the rewards and seeing their wealth grow much faster than those that missed out.”
He said the last five years didn’t just boost wealth but also “reshaped who benefits from it”.
“Asset owners surged ahead, while households without property or investments were largely left standing still, despite superannuation helping the poorest households,” he said.
“For those who already owned property, rising prices have pushed them up the wealth ladder but for those trying to buy in, things are much tougher.
“This middle-wealth bracket was traditionally topped up with a steady stream of first home buyers who would slowly accumulate wealth as they built equity in their home. With the rate of homeownership falling among young people, this cohort is now shrinking.”
He said the cohort identifying as “average” is “collapsing as the majority of wealth continues to funnel up towards property owners and those with sizable asset portfolios”.
“We are at risk of becoming a country where the wealth of your parents is becoming a more significant factor in someone’s ability to generate wealth,” he said.
The source: KPMG Australia media release
