Over 360k Australians lost their millionaire status in 2022

Global wealth declined last year for the first time since the GFC and Australia was the fourth-highest market to experience wealth losses, according to research.

UBS’ latest Global Wealth Report, launched jointly with Credit Suisse, showed total net private wealth dropped by 2.4 per cent to US$454.4 trillion (AU$711.9 trillion).

Regionally, North America and Europe together shed some US$10.9 trillion while Asia Pacific recorded losses of US$2.1 trillion. 

At the end of 2022, there were around 59.4 million millionaires globally. 

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In Australia, the number of millionaires fell by 363,000 to stand at around 1.8 million. It was the fourth-highest drop behind the United States (down 1.8 million), Japan (–466,000) and the United Kingdom (–439,000). 

In terms of ultra-high-net-worth individuals, which the report defined as individuals with wealth above $100 million, Australia shed 910 to bring the total to 3,780.

Still, ranking markets by median wealth, Australia came in second place ($247,453) behind Belgium ($249,940). 

Much of the decline in wealth around the world comes from the appreciation of the US dollar against many other currencies along with interest rate hikes and inflationary pressure, the report found. 

If exchange rates were held constant at 2021 rates, total wealth actually increased by 3.4 per cent and wealth per adult by 2.2 per cent last year. 

“This is still the slowest increase of wealth at constant exchange rates since 2008. Keeping exchange rates constant but counting the effects of inflation results in a real wealth loss of –2.6 per cent in 2022,” said Anthony Shorrocks, economist and author of the report.

“Similarly, financial assets contributed most to wealth declines while non-financial assets (mostly real estate) stayed resilient, despite rapidly rising interest rates. But the relative contributions of financial and non-financial assets may reverse in 2023 if house prices decline in response to higher interest rates.” 

According to the research, the main aspects of wealth composition had changed a little in Australia since 2000.

The share of financial assets in gross assets was 39.5 per cent in the year 2000 and 38.7 per cent at the end of 2022.

The relative size of household debt was also stable, from 16.5 per cent in 2000 and 16.7 per cent last year. 

Nannette Hechler-Fayd’herbe, chief investment officer for the EMEA region and global head of economics and research at Credit Suisse, noted the outlook remains bright looking ahead.

“Over the next five years, we expect global wealth will rise by 38 per cent reaching $629 trillion by 2027, with wealth per adult looking set to increase by 30 per cent to reach $110,270,” she said.

“We also expect the number of millionaires to grow markedly over the next five years to reach 86 million, while the number of UHNWIs will rise to 372,000.”