The faster pathway to building wealth is no longer how much you earn, investors believe

Almost one in two Australian investors believe what they own is more important than how hard they work and the income they earn for building wealth, according to a survey of more than 2,000 investors conducted by online trading platform Stake. This attitude reflects the fact that house prices have risen faster than wages for many years, according to Stake CEO, Jon Howie.

“In Australia, over the past 30 years, house prices have risen by an average of 8 percent per annum, compared to around 3 percent for wages, and it’s a similar story in New Zealand,” Mr Howie said.“Given the property market’s increasing barriers to entry, people are looking for other routes to building wealth. Rather than simply waiting for things to get better, they are upskilling, delaying gratification and engaging with financial markets to supplement their hard work.”

Investors cited slow wage growth as among the three biggest barriers to achieving their financial goals. Almost one in four investors expect no increase to their salary this year, or even a decrease, amid early signs that the labour market is loosening. While the overall unemployment rate remains low at 4 percent, Australian Bureau of Statistics figures released this week show there are 1.9 million people who would like to work but can’t find a job and 1.7 million workers who would like more hours.

Mr Howie said the survey results demonstrated a longer-term shift in our economy and the mindset of investors. “… the traditional blueprint to achieving financial security – namely getting a ‘good job’ and buying property – is not as accessible or reliable as it once was,” he said.

Rapidly rising house prices have made property ownership unattainable for some investors, with only 11 percent of survey respondents ranking real estate as the most accessible asset class for building wealth.

While investors are cutting back on discretionary spending to cope with today’s higher costs of living, about 75 percent are still putting some of their income into investments. The most common amount was 1 to 5 percent of their salary. Younger people have been the most active over the past six months, with 85 percent of 18 to 24-year-olds buying assets during this period. One in five investors said they intended to spend their stage three tax cut savings buying shares.

The survey revealed the five biggest motivations for Australian investors, starting with retiring and living off their investments; and supplementing their wage or salary with investment income. The next biggest motivations were funding holidays and travel, cutting back on hours and buying a home.

Australian investors have various definitions of financial success. More than 85 percent said being debt-free and owning their own home were the two most important financial achievements. Other definitions included being able to live in the neighbourhood they want (77 percent) and having the capacity to help family members (75 percent).

The Australian housing market is rapidly evolving, with new research revealing changing activity in regional and city areas.

The latest Regional Movers Index from the Commonwealth Bank showed the exodus from Australian cities to the regions is significantly exceeding pre-COVID movements, sitting at 19.8 percent higher. Even more revealing is data which showed relocations are 1.8 percent up on the average recorded during the height of the lockdowns. At the same time, people in regional areas are staying put.

The report is a partnership between the Commonwealth Bank and the Regional Australian Institute. RAI CEO Liz Ritchie said the regions have become the permanent home of choice for more Australians.

“The inter-regional migration index —which tracks regional to regional relocations — has fallen by 5.1 percent, suggesting that more regional residents are content to stay where they are. With the continuing strong jobs market across regional Australia, increasing city property prices and ongoing cost-of-living pressures, it’s no surprise the regions remain desirable,” Ms Ritchie said.

She said this had significant implications for planners, with a better understanding of infrastructure needs required by planners.

“Regional Australia is truly the nation’s new frontier. There are so many opportunities in our regional communities, but likewise we know there are challenges. Housing for example remains a key ongoing concern in many communities,” she said. “Regional Australia is growing and for that to continue we need adequate foundations. The time to lay them is now.”

Among the areas to benefit from this shift over the past quarter was the Hunter Valley city of Maitland in NSW which saw a 3.4 percent increase in net migration from the cities and other regional areas. Long seen as the less desirable locale in the wine growing region, Maitland has attracted more buyers looking for an affordable home with lifestyle benefits. CBA Executive General Manager Regional and Agribusiness Banking Paul Fowler said it was an area on the rise.

“There is significant development happening around Maitland, with extensive land releases for residential, industrial, commercial and retail fuelling strong employment and construction industry opportunities,” Mr Fowler said.

“Maitland is also set to benefit from major investments in the area including the nearby Newcastle Airport which will welcome international flights from 2025, further enhancing the region’s accessibility and economic profile.”

And while Melbourne property prices continue to experience a lull, it’s a different story outside the capital, with regions closer to main city centres performing particularly well.

“A move to regional Victoria remains on trend among those relocating, with the state’s regional areas experiencing the largest surge in popularity in the 12-month period to September 2024, with its share of net regional inflows rising from 21 percent to 30 percent,” Mt Fowler said. “Trending scenic LGAs like Queenscliffe on the coast, as well as Moira, Wangaratta and Strathbogie located further north, offer attractive and more affordable lifestyle opportunities for many Australians.

“With more corporate employers setting up or relocating to Geelong, Queenscliffe’s proximity to Greater Geelong and the Melbourne CBD means more regional Australians can enjoy diverse employment opportunities while living in a beautiful location with enhanced lifestyle opportunities.”

The faster pathway to building wealth is no longer how much you earn, investors believe

A new survey reveals almost half Australian investors think the route to achieving their financial goals is not through wages

Buyers are moving there in their droves while existing residents know they’re on a good thing