The number of Australian millionaires increased by 4% to 226,000 in 2014 – more than double the pace of the country’s population growth of 1.5%.
This new World Wealth Report by Capgemini, which compares the number of high net worth individuals (HNWIs) across the world, also showed this group of Australians had approximately 35% of their wealth in property compared, far more than the global average of 22%.
This suggests that the increase of millionaires is almost entirely driven by housing wealth, as most people who own a home outright in Sydney are now millionaires for that reason alone.
However, Australia’s soaring property market has opened up the millionaires to vulnerability should there be a downturn in house prices.
Along with property, Australian HNWIs had 22% of their wealth in equities, 23% in cash and deposits, and 11% in fixed income.
That trend was reflected globally last year when gains in financial markets contributed to the large increase in “paper millionaires” across the board.
The “Asia-Pacific recorded the highest HNWI population increases in 2014 (8.5%) and, as predicted, edged past North America to become the region with the most HNWIs (4.69 million compared to North America’s 4.68 million)”, according to the report.
Meanwhile, the global HNWIs growth rate grew at the second slowest rate of the last five years, held back by the Eurozone, decelerating emerging-market economic performance and tensions in the Middle East and Ukraine.