14 Dec 2018

The richest households are now worth $1.75 million - survey

6:14 pm on 14 December 2018

The richest 20 percent of New Zealand households have seen a rise of $394,000 in their net worth since 2015 - and are now worth a median $1.75 million.


Money Photo: 123RF

That's almost $360 a day, every day for the past three years.

Yet, while the rich are getting richer, those in the bottom 40 percent have not seen an increase in net worth in three years, from June 2015 to June 2018.

With property houses on the rise, the median net worth of a typical Kiwi household is $340,000, up from $289,000 three years ago.

Median net worth by household net worth quintile, year ended June 2015 and 2018.

Photo: Supplied / Statistics New Zealand

"[The top 20 percent of Kiwi households surveyed in the past year] collectively holds about 70 percent of total household net worth. These net worth statistics tell us that wealth is unevenly distributed across the population, and this is unchanged from three years ago," labour market and households senior manager Jason Attewell said.

The Stats NZ survey focused on the assets of thousands of households, including homes, shares, and bank deposits, and the money they owe, such as mortgages and credit card debt.

"This information is important because it can show how well households are prepared for retirement, or how well they can weather a financial storm, such as losing their job," Mr Attewell said.

The survey may not represent the extremely rich, Mr Attewell said.

"It's also showing us about inequality in distribution of net worth. What we've also seen, as a proportion of the total, the lowest 40 percent their proportion remains the same.

"So the rich are getting richer."

Christchurch city missioner Matthew Mark said this Christmas there had been a 45 percent increase in the number of people coming in for food, compared with the same time last year.

Most of the people in that 45 percent were working families.

"So, you might have a two income household on either low skilled or minimum wage and they're just struggling to make ends meet."

But the median net worth for middle New Zealand had gone up from $289,000 to $340,000 since the last survey in 2015.

"For most New Zealanders their main asset is the house they live in so property price increases have a big impact on net worth, and that's what we've seen," Mr Attewell said.

Those rising property values were bad news for the people that Matthew Mark's organisation helps.

"As property prices increase and that's the market we're in at the moment. Anyone who's purchasing a property from an investment perspective wants to get a return that's going justify that investment, by default raises their rent, and most of the people we're dealing with are renters in our market."

Mr Mark said there were some things that could be done to address financial inequality - such as income related rents and making sure people were paid a fair wage - but it's a big challenge.

Wage inequality researcher Max Rashbrooke said today's figures helped support the case for a capital gains tax, to help make things fairer.

"A lot of this increase in wealth particularly for people at the upper end has come through increases in property values. If you're just sitting on a house and it's just appreciating in value, whereas conversely of course if you're working and you get paid a salary you pay tax on every cent of that salary."

Mr Rashbrooke said generally for those at the bottom of the wealth pile - the situation was getting worse.

"The poorest 10th of New Zealanders are all in net debt, so they owe far more than they own, it's a pretty crushing weight around a lot of people's necks - their situation has generally been getting worse over the last couple of decades."

Mr Rashbrooke said many New Zealanders thought of the country as being egalitarian - but that was not the case.

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