Australia's middle class is no longer the world's wealthiest after being knocked out of the top position by Switzerland as well as our geographic and cultural neighbour New Zealand.

Australian total household wealth fell 12 per cent over the past year due to falling exchange rates, an annual report by investment bank Credit Suisse found.

Australia has too few sizeable cities. Credit:Jim Rice

The report uses a wide variety of factors, including wages data and property prices, to assess the growth of the world's middle class.

"The composition of household wealth in Australia is heavily skewed towards real assets, which form 60 per cent of gross assets," the analysts said.