Global X urges investment education as property values fall

The surge in Australian household wealth driven by superannuation and financial assets rather than property, builds the case for an urgent need for Australians to improve their investment knowledge, Global X said.

Latest figures by the Australian Bureau of Statistics (ABS) showed household wealth increased by 1% to a record $19.39 trillion in the June quarter. Superannuation reserves rose by $231 billion, and shares and other equity increased by $36 billion, while the value of land and dwellings fell by $28.7 billion.

ABS said the fall in residential land and dwellings was driven by lower property prices. Household borrowing grew 2.2%, or $73.4 billion, reducing the overall growth in household wealth by 0.4 percentage points.

Global X senior ETF strategist Marc Jocum said the ABS data should not be interpreted as evidence that property was a poor investment or that one quarter represented a permanent change in the way Australians create wealth.

"The latest figures are a powerful reminder that wealth creation is a multi-asset game. Property, shares and superannuation all play different roles, and understanding how they work together is becoming increasingly important for Australian investors," he said.

"That's why investment knowledge matters. Australians need to understand the role different assets play, how concentration can increase risk and why diversification is essential to a long-term strategy."

Jocum added Australians can no longer afford to remain disengaged from the markets shaping their wealth, as the composition of household wealth may be changing.

"For decades, Australia's default wealth strategy has been relatively simple: buy the right property in the right suburb and hold it for the long term," Jocum said.

"Property will remain an important part of wealth creation, but it cannot be our entire strategy. The latest ABS figures show household wealth increased by more than $200 billion even as land and dwelling values declined, with superannuation and equity markets doing the heavy lifting."

With borrowing costs elevated, and an interest rate hike from the RBA expected this week, Aussie households will be feeling the pressure, he added.

"As a nation we really need to raise our understanding of diversification, risk and investment options, because whether we like it or not, our financial futures will be shaped by assets well beyond the monopoly board," Jocum said.