Australian wealth is heavily dependent on the property market
Australian wealth is heavily invested in the property market. As of the second quarter of 2021, the value of combined private household wealth rose to a new record of 13.43 trillion. Wealth per capita also rose to a record high of $522 032 average per Australian adult.
Whilst Australians have never had so much wealth, with it comes a lot of debt. This is according to the latest household data reports. With the looming potential for interest rate increases, some households may be vulnerable to increased loan repayments. This may result in financial hardship.
It may be time to expand your investment portfolio. It was reported that around two thirds of our wealth is held in property. This is compared with as little as and average of 9% for direct shareholdings, which has diminished as property prices have surged.
It may be time to diversify. This would help to reduce the risk of exposing households to property price corrections, when interest rates are increased.
Rates Rise Forecasted within a year
According to the experts, rates are expected to rise within the big four banks within the next 12 months. These rate increase for many could mean substantial monthly loan repayments.
Refinancing hit a record in July 2021, reaching 17.9 billion – a 47% increase year-on-year. This was due to the record low interest rates.
Diversifying your wealth may help you to spread your financial risk
Your options may include your share portfolio or other equities that are more accessible than property. Many are gravitating towards ETF’s otherwise known as “Exchange Traded Funds.” The benefit of ETF’s is that they help to spread financial risk across a diversified portfolio. This contrasts with investing in one or two companies.
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