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What the survey doesn't take into account is how far that money goes.
Consumer goods in Oz are 2-3 time the price they are in the USA.
Housing is super expensive in Oz as is fuel and cars. Mortgage interest rates are also higher and no way to lock in a low rate for more than five years.
What the survey doesn't take into account is how far that money goes.
Consumer goods in Oz are 2-3 time the price they are in the USA.
Housing is super expensive in Oz as is fuel and cars. Mortgage interest rates are also higher and no way to lock in a low rate for more than five years.
Food is also expensive in Oz!!
For consumer and home prices here are a few website based comparisons at todays' exchange rate:
US price for a low spec Toyota Camry - from USD 22,2970 plus taxes and on roads
Aus price for a low spec Toyota Camry - AUD26,990/USD20,782 drive away i.e. includes all taxes and delivery
US price for 22 cu ft (623L) french door refrigerator USD1,599
Aus price for 610L french door refrigerator including all taxes AUD1,845/USD1,420
I suspect on average the price of consumer goods in the US is probably cheaper overall after taxes are added, but not 33 % of what Aussies pay. As for housing , I suspect it depends a lot on which markets in each country and what size and quality dwelling you are comparing.
People forget the effect that exchange rates have on stuff like this.
This report was done with data that is over a year old now. At that time the A$ was about $0.96USD. Historically, this is unusual for the A$. Currently the A$ is trading at $0.7766USD and is facing heavy downward pressure as the mining boom comes to a close and Oz tries to rebalance its economy; and the US looks set to raise interest rates in the summer (which will drive the USD further upward versus its peers), and the RBA looks set to cut rates along with the majority of the developed world. I just read an article a few days ago saying that by the end of the year the A$ will be trading around $0.69USD. When the respective dollars were trading at or near parity the last few years (at one point the A$ was $1.10USD), Australians appeared 'richer' in USD terms. However, with the A$ now starting to go back to more 'normal/historical' levels, Australians will appear 'poorer' in USD terms. I don't want to get into a whole big lecture regarding this, but I wanted to point this factor out in surveys such as these because it sometimes gets overlooked but can be important to consider.
On another point, I would then argue that it's hard (and probably inaccurate) to compare prices of goods at today's exchange rates and say that it's apples to apples for the data and pricing of the same goods that was used for the survey over a year ago at those exchange rates.
But it's housing. It's a nonsense calculation. It isn't more "wealth" because you have to live somewhere in Australia. A place isn't "richer" just because you are forced to pay a higher proportion of income/wealth to living expenses.
How is Australia "richer" if the housing market is crazier? There is no way to live in Australia and avoid the housing burden.
Agreed a house the owner lives in is not specifically a asset by modern definition, its both a asset and a liability so a housing bubble skews the picture significantly.
In addition Australia has a private universal retirement scheme that greatly increases wealth on paper but the catches are its asset tested and the public pension kicks in at 70. In contrast other countries pay public pensions at 65 and not asset tested, this is a very murky area that again skews this simplistic survey.
Australia household private debt is now amongst the highest in the world very much tied into the housing market as per the other countries around the top.
That's for a house, whereas your example of SF is for all properties. For all properties the average is probably around the A$750-800k. I do agree with you that the difference is not as vast.
Quote:
Originally Posted by Battleneter
Agreed a house the owner lives in is not specifically a asset by modern definition, its both a asset and a liability so a housing bubble skews the picture significantly.
You do realise they net the amount don't you?
Quote:
Originally Posted by Battleneter
In addition Australia has a private universal retirement scheme that greatly increases wealth on paper but the catches are its asset tested and the public pension kicks in at 70. In contrast other countries pay public pensions at 65 and not asset tested, this is a very murky area that again skews this simplistic survey.
yes , but is a Aus owner occupier living in a US$1.2 mil house with a 700K mortgage really better off than someone living in a US$450K freehold house in the US?, on paper the Aus owner has more wealth!, but if they have the same income I know who I would rather be :P
Quote:
Originally Posted by BCC_1
huh?
Really? you don't get this?
Translation the Aus government will reduce your public funded pension depending on your assets, in other countries its not asset tested at all.
Its relevant here as the Aus figure includes super saving being compared to a raft of countries, some of which have more generous public schemes.
Translation the Aus government will reduce your public funded pension depending on your assets, in other countries its not asset tested at all.
Its relevant here as the Aus figure includes super saving being compared to a raft of countries, some of which have more generous public schemes.
The median super balance in Australia is ~$10k. So less than 5% of median total wealth estimated by Credit Suisse. The average punter retires with less than $100k super. Superannuation is a tax advantaged structure that favours people on high marginal tax rates: ie you get most benefit from superannuation when you would already be a net saver outside of the super system. I can contribute $150k/year to super from after tax income and then have it concessionally taxed at 15%. The overwhelming majority of Australians retire on the full age pension.
The asset test has stupidly high thresholds. For a homeowning couple to claim full pension they cannot have assets higher than ~$200k (excluding their home) for the part pension they need to have assets less than $1,142,000 (again excluding their home).
The pension age is also 65 (rising to 67 over the next decade) not 70.
The median super balance in Australia is ~$10k. So less than 5% of median total wealth estimated by Credit Suisse.
I am very surprised the medium Super balance could be as low as 10K, that's less than working around 5 years full time at minimum wage. Have you got a link to show 10K?
Found this, but its the mainstream media and they are idiots talking averages.
I am very surprised the medium Super balance could be as low as 10K, that's less than working around 5 years full time at minimum wage. Have you got a link to show 10K?
Found this, but its the mainstream media and they are idiots talking averages.
It's wrong. Especially so when looking by age breakdown. Check out medians for people actually of retirement age. There is no relevance to the discussion of 19 year olds for example.
I am very surprised the medium Super balance could be as low as 10K, that's less than working around 5 years full time at minimum wage. Have you got a link to show 10K?
Found this, but its the mainstream media and they are idiots talking averages.
It's an open secret that superannuation is benefiting one group, and it ain't Joe 9-5. The large gap between the median balance and the average balance shows how skewed it is by people with large super accounts. Those people would not have used the government pension anyway. They are always net savers, the super system just provides them with a tax shelter to save in.
Last edited by BCC_1; 01-31-2015 at 06:28 PM..
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