Property drives net worth, inequality

Soaring property prices have helped to lift New Zealanders’ combined net worth to just over $1.39 trillion.

That figure, calculated at the end of March 2015, was up 9 per cent on the year before, Statistics New Zealand said.

‘‘Net worth reflects the balance of what New Zealanders own and what they owe – that is, assets minus debts held by households and government,’’ Statistics NZ national accounts senior manager Gary Dunnet said.

Except for a 3 per cent decline in 2009, net worth has grown steadily since 2007 – from just over $1 trillion to $1.39 trillion by 2015.

From 2007 to 2015, household net worth increased $319 billion (35 per cent), to about $1236b. Investment in land and buildings was a significant contributor to this increase, although this was partly offset by increased mortgage debt.

Infometrics economist Gareth Kiernan said there was growing inequality thanks to house prices.

‘‘Given that returns from property via capital gains have outperformed returns from other investments over the last few years, I would expect it to have resulted in greater inequality in terms of wealth between those who own property and those who don’t.’’

He said that although growth in KiwiSaver might have gone some way to mitigate wealth inequality caused by property values, much of the money that was going into the scheme seemed to have only been diverted from other savings and investment vehicles.

Over the 2007 to 2015 period, the net amount New Zealanders owed to the rest of the world rose from $130b to $153b.