The number of Australian millionaires has fallen for the first time in five years, following a turbulent year in financial markets.
There are now 440,000 Australians who control more than $1 million in investable assets such as cash and equities, excluding their family home, as of October. This is down from 445,000 in 2014, according to Investment Trends, which refers to this group as high-net-worth investors.
"Direct shares and property make up two-thirds of a typical Australian HNW (high net worth) investor's portfolio," said Irene Guiamatsia, senior analyst at Investment Trends.
"Whilst the property market remained buoyant, the slump in commodity prices and sharemarket volatility throughout the year weighed down on overall asset growth," she said.
The collective wealth of these rich individuals now amounts to $1.55 trillion, which is a slight dip from last year's $1.57 trillion.
Since the start of this calendar year, investors worldwide have lost trillions of dollars as worries over China's economic growth spread among global markets. The benchmark S&P/ASX 200 index, which tracks the share prices of Australia's biggest companies, has plunged 10 per cent in the past two months alone.
On Friday, Reserve Bank of Australia governor Glenn Stevens told a House of Representatives committee hearing the markets are "dropping their bundle", adding that it was "uncertain" how the market turmoil would pan out.
"No one knows the future," Mr Stevens said, noting it was too early to know whether the surge in financial-market volatility will dent Australia's economy.
Ms Guiamatsia said the "sustained and seemingly un-abating growth" in the number of Australian millionaires has finally come to an end. However, she does not believe that there is a threat the number of high-net-worth investors will fall significantly in the coming years.
"Let's note that millionaire numbers still grew through 2011 when it's fair to say the markets performed rather poorly," she said.
Investment Trends' research found more than 60,000 rich investors pointed to property as the main source of their wealth – up from 30,000 in 2013.
The average investor held about 16 per cent of their portfolio in cash and term deposits, despite record low interest rates of 2.5 per cent.
These investors have signalled their interest in parting with cash for growth assets such as shares, but some are finding it difficult to find homes for their assets amid ongoing volatility.
"HNW investors are keeping a sizeable part of their wealth in the most liquid form at the moment, despite uninspiring cash rates," Ms Guiamatsia said.
"Our research indicates this state of affairs could, however, evolve rather quickly under the right circumstances."
Many are waiting for better confidence in the sharemarket (36 per cent), and improved economic outlook (36 per cent) before parting with cash, the research found.
"Where are they looking to invest their excess cash? Direct shares for the most part, with three out of four HNWs citing this. Then comes managed funds, ETFs [exchange traded funds] and investment property," Ms Guiamatsia said.