The number of millionaires in Australia is set to rise sharply in the next five years, according to a new report published by global financial services firm UBS.
The Global Wealth Report, which looked at data from 56 countries in 2023, found that the world is getting progressively wealthier and upward mobility is becoming more pronounced.
The report also found strong growth in wealth in Australia, with the average wealth per adult increasing by nearly 10 per cent from 2022. That was more than twice the rate of the other countries examined.
There are 1.9 million US-dollar millionaires that call Australia home, according to the report. And it predicts that is expected to grow by about 400,000 people over the next five years.
Who will be the new millionaires?
Australia has seen strong growth in wealth levels over the past 25 years,, according to Professor Roger Wilkins, deputy director of the Melbourne Institute of Applied Economic and Social Research.
Wilkins said that much of the growth in wealth can be attributed to assets.
"If they're a typical homeowner, if they've paid off their loan, they're going to be almost by default a millionaire in the not-too-distant future because the median house price is already getting around that level."
Wilkins also said that Australia has a "tsunami coming" in terms of who will die with a significant amount of wealth due to conservative spending of retirement savings.
People who can expect these inheritances will mostly be in their fifties to mid-sixties — people who don't necessarily have an acute need for money in terms of raising families or entering the housing market, Wilkins said.
"It looks like the biggest beneficiaries of inheritance will be these people who are already quite wealthy," he said.
What does this mean for inequality?
While average wealth increased 10 per cent from 2022, median wealth only increased about half as much, suggesting wealth in lower socioeconomic brackets rose more slowly than in the higher ones.
but remains below average when compared with other Asia-Pacific countries, according to the UBS report.
Wilkins said that a relatively high rate of home ownership and the superannuation system in Australia have helped to mitigate growing wealth inequality in Australia.
As of 2022, 66 per cent of Australians owned their home, with or without a mortgage according to Australian Bureau of Statistics data.
"But that doesn't create a lot of room for complacency because there's emerging trends that are a concern," Wilkins said.
Wilkins said that and the increased difficulty of accessing the housing market for people in their 20s and 30s, combined with a growth in investor ownership, could see broadening inequality in the future.
The report, released on Thursday, came on the same day Australia's Productivity Commission found most Australians were earning more than their parents did at a similar age.
But wage stagnation means people born in the 1990s have experienced almost no income growth between the ages of 25 and 30 compared with those born in the prior decade.
Commission chair Danielle Wood said it also identified a 'stickiness' at the extreme ends of the income distribution spectrum with those raised in very low-income households more likely to stay there.
"We find there is a group that gets stuck in poverty, they’re more likely to be older, they’re more likely to be renting from a migrant background where they’re not speaking English at home, and more likely to live in a disadvantaged area," she said.
"It looks like there's a group of Australians getting stuck in poverty and we think that's an area we need to focus our policy efforts."
The Productivity Commission report also found women were less likely to out-earn their parents than men.
With additional reporting by Hannah Kwon.
