2 Jul 2020

Gap between haves and have-nots widening in NZ - survey

12:50 pm on 2 July 2020

The gap between the financial haves and have-nots is widening, according to a new survey.

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Young people, Māori and Pasifika, and those renting their houses continue to struggle to accumulate wealth, according to the annual investor confidence survey by Kiwi Wealth, the financial services arm of Kiwibank.

"We still have a deep-seated, uneven distribution of wealth in New Zealand and the gap between those who feel wealthy and those who don't has got worse since last year ... there are growing numbers feeling shut out of wealth," Kiwi Wealth general manager of retail and product Melissa Vasta said.

The survey showed the overall level of investor confidence was unchanged from last year, with 28 percent saying they were more wealthy, 46 percent saying their position was unchanged, and 26 percent feeling less wealthy.

However, those feeling more wealthy owned property along with other investments, while those feeling less well off tended to be renters and young, pointing to wealth perceptions being tied to property ownership.

Vasta feared the gap would continue to widen in the aftermath of the pandemic.

"The likelihood is that they will be disproportionately affected as a recession begins to bite and wealth prospects remain bleak for many younger renters. They are faced with much higher costs of living and greater levels of debt than previous generations and, as a result, have limited or no capacity to save money and invest to create future wealth.

Vasta said the survey was updated as the economy moved out of lockdown and it was clear that Covid-19 had dented the confidence of those with property and investments, because they had the most to lose.

Conversely it seemed to give a spur to younger people to dip their toes into financial markets using digital platforms to take advantage of the market turmoil to start investing or to increase their existing investments.

The report found that more Kiwis had investments or savings than in February, and nearly a quarter of those with investments made a change to their investment, which is what would normally be expected over a full year.

"Most likely that's because people were spending less during lockdown so have more discretionary money to put towards savings or investments," Vasta said.

"People were putting in more money into their investments rather than reducing it which is very good to hear. In fact, fewer were withdrawing money from their investments compared to February."

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