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Aussies are now even richer

NO WONDER Australians are confident about the future - we are the richest we have ever been. Thanks to the booming property market over the past decade and a resurgent sharemarket, every man, woman and child has a net worth of $250,000, compared with $125,000 in 1997, a joint report by the Treasury and Bureau of Statistics has found.

"It is the sheer magnitude of the wealth gains in recent years that is truly staggering," says Commonwealth Bank's CommSec chief equities economist Craig James. "In the past seven years, private-sector wealth has doubled and gains in wealth over the last decade have not been equalled in 40 years."

The 119 per cent increase in private wealth in the past decade was driven by historically low interest rates, 13 years of unbroken economic growth, and falling unemployment - now near a 23-year low - which underpins the perception of prosperity since the Coalition won office in 1996.

Since then, the average house price has more than doubled. The wealth study negates concerns about the level of household debt, which has reached 150 per cent of annual income. Treasury figures show that private debt is up 10 per cent to $384 billion, or $19,140,per person.

"The implied wisdom is that Australians are drowning in a sea of debt. But the official evidence reveals otherwise," Mr James says. "Higher wealth can provide people with greater financial freedom, allowing them to take on more debt or increase spending, especially on discretionary or non-essential goods and services."

Still, despite the country's low interest rates, Australians are repaying more than when rates peaked at 17 per cent in 1987, because of the size of household debts, with very little leeway should rates rise further.