A recently released study by CommSec shows that the average Australian is enjoying 4.0% greater prosperity than this time last year, with the overall prosperity picture the best since 1987. Individuals owning shares and real estate are best off, with share prices rising 8.2% in 2009. Housing prices are up 13.6% in 2009, 40% over the past five years, and 138% over the decade.

The study by CommSec, the National Performance Gauge, measures economic indicators over many areas, such as retail sales, employment, consumer confidence, and economic growth, as well as purchasing power as applied to cars, petrol, and housing.

Craig James, CommSec chief economist, said the prosperity index was up 9.5% from September 2008, when the global financial crisis had forced the index to a seven-year low. One indication of the higher prosperity was the average Australian worker’s purchasing power, currently capable of paying off a Ford Falcon in 30 weeks as compared with 36 weeks five years ago. That’s the best result in 35 years.

The prosperity index, of course, is being negatively affected by the unemployment rate, 1.1% higher than this time last year, as well as the Reserve Bank’s monetary tightening, with four rate hikes totalling a full percentage point within the prior five months. The higher interest rate particularly affected homeowners’ ability to pay their mortgages. It now takes the average Australian worker 1.58 weeks to earn the money for mortgage payments, compared with 1.27 weeks ten years ago.

Mr. James said that future RBA rate hikes are likely to be the weightiest drag on the prosperity index this year. He also acknowledged that there were difficulties with the prosperity index.

“Certainly it is difficult to accurately compare different periods of time,” he said. “And some people would prefer that interest rates were lower or perhaps jobs were more plentiful. But in terms of general economic well-being, you would be hard pressed to fault the current times.”

Source: http://www.theage.com.au/