Own a home? You probably got richer during the pandemic

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Most people became wealthier during the pandemic largely due to an increase in property prices, new figures show, with the gap between the country’s richest and poorest increasing further.

Roy Morgan’s latest Wealth Report shows “real” wealth, after accounting for inflation, has risen 7 per cent for the three years to March this year.

Most people became wealthier during the pandemic largely due to an increase in property prices, new figures show.Credit: Matt Davidson

Half the population now accounts for 95.4 per cent of the nation’s “net” wealth – after subtracting debt, and the other half, dominated by renters, accounts for only 4.6 per cent of wealth.

While the wealthiest 90 per cent have seen their wealth rise over the three years, the wealth of the bottom 10 per cent is less than it was at the start of the pandemic just over three years ago.

The figures are derived from Roy Morgan’s interviews with tens of thousands of people each year, which include details about their finances. They also underline the importance of homeownership for wealth generation.

“The value of owner-occupied homes represented the largest absolute increase in the three years under our microscope,” said Michele Levine, the chief executive of Roy Morgan.

The ranks of the wealthiest 10 per cent of Australians are dominated by those who have paid off or are paying off, their homes. Only 1 per cent of those in the wealthiest 10 per cent are renters.

The rapid increase in interest rates since May last year and higher prices for essential goods and services are stretching family finances.

Roy Morgan estimates more than one-in-four mortgage holders, or just over 1.4 million people, were at risk of mortgage stress in the three months to May – the highest it has been since 2011.

The family home has a privileged place in the taxation and social security systems, but rising property prices are making it harder to get a foot on the wealth ladder.

Property prices continued to rise in June. CoreLogic figures show Sydney home values increased a further 1.7 per cent in June, taking the cumulative recovery since January to 6.7 per cent. Melbourne’s prices rose 0.7 per cent in June and have risen a cumulative 2.3 per cent since prices bottomed in February this year.

“A surge in underlying demand on the back of high immigration and constrained supply have been dominating the negative impact of higher interest rates in the last few months,” AMP chief economist Shane Oliver said.

“While our base case is that home prices have bottomed, the risk of another leg down [in prices] as the full, lagged, impact of interest rate hikes on the property market and on unemployment materialises, is very high.”

With many potential buyers priced out of the market, there are a handful of suburbs in each of our two largest cities that are affordable and close to work, transport infrastructure and amenities, among other favourable factors.

Comparison website Canstar and real estate researcher Hotspotting have identified units in the Sydney suburb of Stanmore, which CoreLogic figures show had a median price in February of $820,000 as among its best picks for first time buyers. Sydney’s Mascot, with a median price of $850,000, is also among their best picks.

The analysis nominates units in Melbourne’s Kensington ($560,000) and Richmond ($640,000) as among the best picks in the southern capital.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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