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Do Aussies define their wealth just by home ownership? Financial freedom has evolved, a new AMP report has revealed.
Financial freedom to ‘pursue passions’ and support ‘those we care about’ has changed how Aussies define ‘wealth’, according to demographer Bernard Salt AM.
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In his latest report produced for AMP Limited launched on Tuesday (28 February) — titled What wealthy means to Australians in 2023 — Mr Salt assessed that more Australians now define ‘wealthy’ as having the “financial freedom to pursue passions” and “support those we care about,”, marking a shift from “the singular pursuit of home ownership sought by previous generations”.
He explained that while home ownership is still important, with a drop from 73 to 63 [percentage points], "[it] hasn’t been a plummet,” he emphasised.
“It’s been a gradual, kind of shift you get where there [has] been a ‘megatrend’ shift in Australian values: the way we want to live, the way we want to form relationships, or households,” Mr Salt said.
“I think you can say that that home ownership has eased as an objective in mind, but … 63 per cent is still the overwhelming majority of houses in Australia [that] are owned either with a mortgage or outright.”
Mr Salt said the trend, at the moment from 2016 is an uptick, so it could actually be higher than 63 per cent and that “we’ll know in the 2026 census.”
The changes in how Australians view ‘being wealthy’ and the different forms it now takes, though, are clearly evident, the latest AMP data had revealed.
The new research — which for the first time examined home ownership census from as early as 1911 — drew on a range of demographic data and analysed key societal developments over the past 50-plus years, to explore ‘what it means to be wealthy in Australia today’, and ‘how and why our attitudes have changed’, it explained.
Marrying and having children later, higher rates of divorce, and increased life expectancy have “culminated in more ‘alone time’ for many Australians”, leading to a more “individualised view” of how we think about wealth, it highlighted.
The changing structure of the Australian family
Contributing to how Australians see wealth, and or acquire it and use it, is the evolution of the family unit and the rise of singles and couples on the financial landscape, Mr Salt outlined.
“Households have changed; households are really couples and couples only, and then families, but … the couple with kids has decreased from 1981 about 78 per cent down to 71 per cent,” he said.
“So it’s been a 7 percentage point downshift in couples with children. And where it has increased of course is just couples only.
“This is because people are living singly, or as a couple, in their 20s before they make a choice.
“There’s been a modest increase in single-parent families up from 13 per cent to 16 per cent, so it’s a 3 percentage point uplift, but it’s a major shift of the rise of couples and singles.”
Home ownership used to equate to being ‘wealthy’
One particular AMP focus group comment — that ‘being rich doesn’t make you happy’ — was described by Mr Salt as interesting but commented: “We’ve all known that, of course, but then again home ownership makes you feel financially secure.”
“There is a diversity of views around home ownership,” he said and that not everyone [is sold into the idea that home ownership represents security], but it’s still a dominant view.
Ultimately, he resolved that Australians once equated ‘wealthy’ with home ownership, but these were Australians who came through war, came through the depression.
“It was absolutely everything and the social structure that supported that … would not be accepted by Australians today,” he explained.
“It had to change and you can see that in terms of the household, the household structure.
“Australians today will likely quote the idea of wealthy with having the freedom to respond to a range of different situations.”
Generational perceptions and changes to ‘wealth’
An AMP focus group discussing the topic entertained home ownership and wealth views from different cohorts.
In a younger cohort, it found wealth has quickly evolved from being about ‘financial success’ to their ‘personal success’.
As teenagers, many recalled a focus on what they wanted and what others had — a ‘keeping up with the Joneses mentality’.
As young adults, most recalled that they still aspired to meet certain milestones and match their friends’ personal and financial success: moving out of home; travelling; partnering; having children; establishing and furthering their career; and saving for a house deposit.
The focus group found that the younger cohort has a ‘more holistic’ view of wealth these days, focusing on their own personal definitions of success and placing a higher value on non-tangible wealth such as health, companionship, and contentment.
In an older group of participants, financial wealth remained ‘the anchor’ until much further into their ‘life journey’, but there has “been an evolution”, it revealed.
Like Millennials and Gen Y, the older cohort recalled placing a greater emphasis on financial wealth earlier on in their life journey as they strove to set themselves up to the best of their abilities.
Today, older people place more emphasis on health, happiness, and family, it found.
[Related: AMP residential loans hit $23.8bn]
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