The financial services sector has to adapt to Australia’s changing perception of wealth which has shifted from more than owning a house.
Speaking at a presentation of the ‘What wealthy means to Australians in 2023’ research report on Tuesday morning in Sydney, AMP chief executive Alexis George said the key finding is the modern concept of “wealthy” for Australians is “more than home ownership”.
“As someone who is a product of the 1960s that’s really confronting because I’ve strived my whole life to have that house,” George said.
“My parents were so proud the day they paid of their three-bedroom house in Bega.”
George added that financial services providers have to think differently about their customers and what needs to be done to help them achieve an alternative definition of wealth.
“For many [home ownership] still is the ultimate goal, but it’s not only about home ownership,” George said.
“People are no longer willing to compromise their lifestyle, whether that’s travel, social interaction with friends and family, for that home ownership.”
Building the dream
Working on the research, demographer Bernand Salt reviewed 110 years of Australian census data.
According to his research, it was 31 years before the release of the The Castle, the iconic film centered around the Australia dream, that Australia achieved the highest proportion of home ownership – 73 per cent of households in 1966.
“In 1911 about 48 per cent of households were owned on the Australian continent barely 10 years after federation,” Salt said.
“I actually see that as an intergenerational dividend of gold. We’re a really rich country on a per capita basis around the turn of the century.”
Salt noted the greatest lift in home ownership in Australia was from 1947 to 1966, which was the birth of the middle class. He added this demographic lived through the great depression and WWII, which shaped their world view.
“They remember war rationing,” Salt said.
“Home security meant absolutely everything to that generation.
“There was a cultural shift after 1966 after that as that war [and] depression generation subsided.”
Peaked, but not bottomed out
According to the research, home ownership dropped 10 percentage points to 63 per cent after peaking in 1966.
“Look at the freedoms we’ve gained – it means that we traded off [higher levels of home ownership] in order to get superannuation or to provide other sources of income and wealth,” Salt said.
“Over the last 55 years – from 1966 to 2021 [date of the most recent census] – there has been a 10-percentage point downshift in the proportion of Australians or households that are owned outright. Over the last half century our concept of what is important of wealth has shifted.”
While lifestyle changes are part of the shift, Salt said increased freedoms for women meant they were settling down later in life and families were being created later.
According to data he presented, he found the average age of first marriage for Australian women was 21 in 1971, which has since increased to 28 today.
“I’ll trade off one or two percentage points or more in order to give women access to the workforce, in order to be inclusive, to have the right to dissolve an unhappy relationship,” Salt said, noting no-fault divorce legislation was passed in 1975 as well.
“What do women do with those seven years? Tertiary education, travel, trialling relationships and jobs, improving their life skills. These are choices that weren’t made in 1966.”
Life expectancy has also changed, from 69 in 1950 to 77 in 1990, and to 84 in 2023.
“The idea of saving for retirement or superannuation… which can be up to two decades or more for modern Australians is really important – these are not issues that we as a society have never had to deal with,” Salt said.
