Property : Australia V US

[Garry K]

Just sat through a usual fund managers presentation (a BIG US group), and of course part of that was "bagging" property as an ivestments.

Comparisons were made between Aus and US wealth.

He produced a graph, which showed Household Wealth by Asset Classes

Housing (includes residential owner occupied) Aust 70% US 33%
Equities and unit trusts 6% 36%
Life Insurance (probably includes some super) 14% 2%



Fund managers conclusion - aussies have way too much invested in property! No surprise with that comment.

Interestingly, a graph he showed me before that was on Net Household Wealth as a % of GDP.

Aust US
1980 210 310
1990 275 350
2000 355 450 (peak before tech crash)
2004 450 398


So, counter argument might be: Guess what, Aussies have got it right! Unless of course there is a serious recovery in equity markets in the US, which would restore their wealth again.

I must admit however, I was surprised by the % of our personal wealth we have in property. But when I thought through it, it is likely that for many people, their only significant asset is their house. Why is this seen as a bad thing?

Anyone know the % of home ownership in Australia compared to other countries?


GarryK

[Jamie]

Anyone know the % of home ownership in Australia compared to other countries? GarryK

Proportion of home ownership:

Country 25-29 30-39 40-49 50-59 60-69 70-79 Average

Australia 33.74 60.27 75.46 82.37 81.69 79.98 70.06

Austria 23.46 43.49 48.63 52.62 52.22 37.88 44.32

Belgium 31.98 59.36 71.76 75.18 73.65 69.82 65.58

Canada 35.93 59.46 73.33 73.75 70.28 58.65 62.81

Finland 43.61 67.70 79.43 81.33 79.39 74.34 72.19

France 20.36 47.03 63.06 66.90 68.83 63.37 57.10

Germany 11.39 33.28 45.36 54.03 56.71 39.01 42.81

Italy 31.42 47.88 65.55 69.96 71.23 65.74 62.91

Luxembourg 39.71 54.18 71.35 75.89 81.66 67.94 66.60

Netherlands 33.50 55.16 61.65 55.78 38.92 24.00 47.57

Spain 48.10 67.57 76.53 78.66 79.81 76.55 74.33

Sweden 32.36 49.91 60.49 64.40 59.80 52.94 54.42

UK 59.05 70.62 76.30 74.99 66.40 56.92 68.56

USA 37.70 59.53 73.42 78.00 78.84 74.80 67.15

http://www.dise.unisa.it/WP/wp44.pdf

Edit: Link doesnt seem to be working, but was when I originally posted these numbers in December

Jamie.

[Aceyducey]

Funnily enough the Macquarie report (http://www.somersoft.com/forums/showthread.php?t=15977) puts Australian home ownership up at the 77% level....

I haven't seen this high a bit elsewhere however. 70% is the normal amount quoted....and has remained fairly level for the last 25 or so years, whereas in other countries home ownership has headed in various directions....such as the UK which has had an increase from 49% to current levels in that period.

Cheers,

Aceyducey

[Garry K]

Thanks Jamie, so we are only marginally higher than US.

Maybe it comes down to the idea that Aussies just love property, and that yanks have been richer for quite some time, have been investing for longer and more comfortable with shares.

Of course our share market is very concentrated and in the past we haven't had too many international companies.

GarryK

[tonyd]

Housing (includes residential owner occupied) Aust 70% US 33%




Proportion of home ownership:

Country 25-29 30-39 40-49 50-59 60-69 70-79 Average

Australia 33.74 60.27 75.46 82.37 81.69 79.98 70.06

USA 37.70 59.53 73.42 78.00 78.84 74.80 67.15



Where does the 33% come from?

[Garry K]

Hi Tony

Sorry, the numbers in my post "moved" after submitted.

The 33% is the % that Housing (including own homes) represents in the total Wealth by Asset Class of United States Households.
In Australia its 70% (not to be confused with the 70.6 av % of home ownership posted by Jamie)


ie If a US families wealth is $500K, 33% ($165) is in Housing.

Other Household Wealth Asset Classes in US are Equities 36% (Australia 6%), Life Insurance 2% (Aust 14%), Deposits 10% (Aust 8%), Bonds 5% (Aust 0%?) Other 14% (Aust 2%)

The information from UBS,ABS,Thomson Fiancial Datastream and Citigroup.

GarryK

[Aceyducey]

Where does the 33% come from?
Asset weighting.

The guy's chart showed that only 33% of US investor wealth is stored in their property.

Does not necessarily have to correlate with home ownership.

I'd suggest that Super may not be being counted in Australian figures, but 401s would be definitely included in the US figures.

Cheers,

Aceyducey

[Garry K]

Asset weighting.

I'd suggest that Super may not be being counted in Australian figures, but 401s would be definitely included in the US figures.

Aceyducey

Hi Acey

Checked with them on that. They confirm super is in the Aussie figures in equities.

Still seem pretty rubbery to me, but, at the end of the day (as they say), it was a fund manager with a vested interest in telling us there is too much invested in property.

GarryK