New Zealand households are a median 21 per cent wealthier than they were in 2018, new Stats NZ data shows. It has released new household net worth statistics, which indicate the median net wealth of New Zealand households hit $397,000 in June last year, up from $328,000 in June 2018. Those in the poorest quintile had median net worth of $11,000, up from $8000 in 2015 and 2018. Net worth is a measure of assets minus debts. The top quintile had a median $2.024 million, up from $1.328m in 2015. To be in this top 20 per cent of households, you now need worth of $1.1m. For the top 10 per cent, you need $2.025m. READ MORE: The top 20 per cent held about 69 per cent of total household net worth, Stats NZ said. It said the increases were largely driven by the value of people’s homes and other real estate investments. What properties were worth to a household was calculated based on their rateable value at the time. Owner-occupied homes and other real estate were 43 per cent of total household assets in 2021, compared to 39 per cent in 2018. Young people had the lowest median individual net worth, at $3000, each while people aged 65 to 74 had the most, at $433,000. Median individual net worth of Europeans was the highest at $151,000. Māori had a median net worth of $42,000, even after adjusting for their younger age profile. Researcher Max Rashbrooke said the data showed that the property boom had benefited the “middle class” in particular. “If you look at wealth ownership by individual, in 2015 the wealthiest 1 per cent of individuals had 21.8 per cent of wealth, in 2018 they had 20.1 per cent and in 2021 they had 20 per cent.” He said there was a caveat in that the very richest people in the country refused to be part of surveys. The 1 per cent might in reality have more like 85 per cent of wealth than 20 per cent, he said. “But this doesn't suggest it’s getting worse in terms of the share of wealth people have. “What this suggests is that the increase in wealth in the last six years has predominately benefited what you might call the middle classes. “There’s this group I call the next 40 per cent – people who are not in the 10 per cent but in the next tranche down. Their share has gone from 38.6 per cent in 2015 to 39.6 per cent in 2019. “What that tells you is housing is the most important asset for the middle classes, the housing boom has benefited them the most. If you’re in the 1 per cent, yes have a big house, but it’s not an important part of your wealth because you have so many businesses and so many shares, you have so many financial investments. “There’s been this huge housing boom that has increased the gulf between homeowners and non-homeowners but it hasn't benefited the 1 per cent as much as it has benefited the middle classes.” But he said when wealth was increasing, even if the share remained the same, the dollar values were significant. The wealthiest fifth had their net worth increase by $300,000 and the poorest only $3000. Economist Shamubeel Eaqub said the property-driven increase in wealth was likely to be bigger than the data showed, because house price increases had continued through the rest of 2021. “Over the course of the last few years if you own property then you are better off in two ways. The value of your property went up a lot – nearly 40 per cent in two years – and if you also had debt you were better off because you paid less for it.” He said New Zealanders’ combined property wealth had increased by $460 billion over two years. People who had houses often had shares or other investments, and they had also performed strongly. Infometrics chief forecaster Gareth Kiernan said the combination of KiwiSaver and that strong sharemarket performance had improved some people’s net worth significantly, particularly if they were starting from a lower base. The data showed people aged 15 to 34 as well as Māori and Asian populations, had seen their wealth increase faster than average over the past three years. “Because many of these people didn’t have high amounts of net wealth to start with, the effect on their net wealth position has been disproportionately large. “As a point of reference, the NZX50 rose almost 60 per cent between the start of 2018 and the start of 2021. The Dow Jones’ rise was much more modest, at about 23 per cent, but it’s worth remembering that anyone contributing to KiwiSaver will get a 50 per cent top-up from the government for their first $1000 of contributions, implying a strong return anyway.” While rising house prices have led to first-home buyers taking larger mortgages in recent years, as a whole New Zealanders owe only $25 for every $100 of property owned, and $14 for each $100 of total assets. But the amount of debt held by households had increased 29 per cent since 2018, Stats NZ said. That included money borrowed as home loans, student loans or debt on credit cards. “Mortgage debt on the family home, which increased by 30 per cent from 2018 to 2021, was the main reason for an increase in total household debt. Other real estate loans also contributed to the increase, rising 44 percent,” wealth and poverty statistics senior manager Andrew Neal said. Property debt made up 89 per cent of New Zealand’s total household debt, not including properties held in a trust. Debts on people’s main homes accounted for 66 per cent of total household debt. Consumer durable loans, education loans, and other loans and liabilities remained at similar levels to 2018, and together made up the remaining 11 per cent of total household debt. Only 32 per cent of households had a mortgage on the primary residence, but for those households the median property debt increased to $260,000 in the year ended June 2021, up $56,000 over the three years. “Recent years have seen an increase in both housing values and mortgage debt,” Neal said. Classification of households by income shows that those in lower income quintiles tend to have smaller debts, which may reflect constraints on their ability to borrow, for instance to take out a mortgage. Stats NZ said it was notable that those in the lowest 20 per cent of income earners had similar levels of debt to those in the next quintile. “Our survey data shows households that have larger incomes are borrowing more to purchase assets, particularly a home,” Neal said.
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