Net wealth of households up but distribution of wealth unchanged
The distribution of household wealth has remained unchanged between 2015 and 2021, despite the increase in the median net worth of New Zealand households over this period, reports show. Statistics New Zealand.
Median household net worth has been rising for several years and was estimated at $397,000 in 2021, after rising 21% in the previous survey in 2018 and 39% in the first such survey in 2015.
Household net worth is calculated as the value of financial (stocks, bank deposits, etc.) and non-financial (real estate, vehicles, etc.) assets owned by a household, minus its liabilities, including mortgages.
“The wealthiest 10% of New Zealand households continue to hold around 505 of the total net worth of New Zealand households – as they did in 2015, which was the first such survey of household net worth. households from Stats NZ,” said Mike Webb, Head of Wealth and Spending. at Stats NZ.
Ownership was the top driver: The median household net worth of those who owned or partially owned their homes was $635,000 in the year ending June 2021, compared to $54,000 for those who rented.
“Those who own their homes are generally in a much stronger financial position than those who rent.
“As the net worth survey captures the equity (or valuation) assessment of real estate at the time of the survey, the net worth of homeowners would be even higher when measured with values market value above capital value,” Webb said.
In the middle of the equal distribution, wealth still attracted wealth: the median net worth of the richest 20% (quintile 5) of New Zealand households increased by $313,000 over the past three years to 2.02 million for the year ending June 2021, while the poorest 20% of households (quintile 1) increased by $3,000 over the same period to reach $11,000.
“Between the quintile groups, there are also significant differences in financial assets, including currencies, bank deposits, pension funds, stocks and other stocks, life insurance funds, and annuities.
“Those in the top 20% have median financial assets of $1.11 million in the year ending June 2021, while those in the bottom 20% had a median value of $9,000” , said Stats NZ.
The data is the result of a survey of over 4,400 households as part of the Household Economic Survey, but may not provide a representative picture of the extremely wealthy – their small numbers made it relatively unlikely to select their households.
Net worth construction is tied to age group and generally increases with age until around retirement, and young people (15-24) had a median individual net worth of just $3,000 in 2021, while those at retirement age (65-74) had $433,000 in good health.
“The Household Economic Survey is not designed to measure total wealth, but helps to understand the distribution of net worth among the population, as well as the financial readiness of Kiwis for retirement,” said Stats. NZ.