Wednesday, August 31, 2011

The new rich. They're less rich, except in Western Australia

What’s rich?

Low income (Average, bottom 20% of households)

$360 per week

Middle income (Average, middle 20% of households)

$1323 per week

High income (Average, top 20% of households)

$3942 per week

Low wealth (Average, bottom 20% of households)


Middle wealth (Average, middle 20% of households)


High wealth (Average, top 20% of households)

$2.2 million

Mean gross household income, Mean household net worth 2009-10, ABS 6523.0

The global financial crisis has knocked a hole in Australian incomes and spread wealth more evenly, except in Western Australia.

The latest biennial income distribution report from the Bureau of Statistics shows every income band but the lowest went backwards before inflation in the two years to 2009-10; all but the bottom band suffering from a weaker share market and lower capital gains, with the bottom band propped up by an over-the-odds pension increase.

The average income earned by a household in the top 20 per cent slipped from $4136 per week to $3942 after adjusting for inflation.

The average mid-range household income slipped from $1356 to $1323.

At the bottom the average household income climbed from $350 per week to $360.

Total disposable income fell for the first time in 14 years.

The Bureau’s measure of inequality shows incomes being spread more evenly in every state but one... In Western Australia the income earned by the top 20 per cent of households surged 8.7 per cent over and above the rate of inflation pushing up the average for a high income household from $4309 per week to $4682 per week, or $243,464 per year.

By contrast the incomes in every other band in Western Australia slipped pushing up the state’s inequality index 5 per cent.

Western Australia has the highest and most uneven incomes of any state and Tasmania the lowest and most even.

NSW is the second highest earning state followed by Queensland and Victoria.

The typical Melbourne income is $1,422 per week; the typical income in the rest of the state $964 per week.

Wealth is distributed far less evenly than income with an typical household in the top 20 per cent laying claim to $2.2 million in savings and a typical household in the bottom 20 per cent owning just $31,829.

Households that rent earn less and have less saved up than households who own their homes outright. A typical renting household has amassed $158,406, a typical mortgagee household $769,848 and a typical household which has paid off a mortgage $1.8 million.

The proportion of Australians who own their homes outright has slid to its lowest since the survey began in 1994. Around 32.6 per cent of households owned outright in 2009-10, down from 33.2 per cent in 2007-08 and 41.8 per cent since the surveys began after slipping in each one.

The proportion of households with mortgages climbed to an all-time high of 36.2 per cent, as the proportion of renters slipped from 29.7 to 28.7 per cent, making households more exposed than ever before to changes in mortgage rates.

Separate building approval figures show just 7600 private sector houses were approved in July, almost unchanged from June and down 12 per cent over the year. Around 2900 houses were approved in Victoria, down 10 per cent on a year earlier.

“These figures add weight to our view that the housing sector is going backwards at a rapid pace,” said CommSec economist Savanth Sebastian. “Homes sales have hit 10 year lows, house prices have been tracking lower for six months and housing credit is at the weakest levels since the late 1970’s.”

The ABS income distribution report showed the number Australians per house climbed from 2.51 to 2.67 per house in the five years to 2009-10, the first such rise on record.

Published in today's SMH and Age

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6523.0 8731.0