Feeling rich? Kiwis' household assets hit $1.5 trillion
Monday, 10 December 2018
New Zealand's household wealth has soared over the past 10 years - but not everyone has felt the benefit.
The net worth of New Zealand households was $1.5 trillion at March 2017, up from $886 billion at March 2007, Stats NZ said.
The rise in value of property assets was the main contributor to the overall increase in the net worth of households.
From March 2007, property assets owned by households rose $316b, most of this after 2012.
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The pension fund sector, which includes KiwiSaver, is where many households place money for their retirement.
Growth in assets belonging to pension funds has been strong since March 2012, and at March 2017 were $51b, or 204 per cent, higher than at March 2007. Of this rise, about 88 per cent was from contributions to funds, and the remainder from changes in the market price of investments and other changes.
Economist Cameron Bagrie, of Bagrie Economics, said, on the face of it, New Zealanders should be feeling richer.
'Asset prices have risen sharply. Shares, property prices, you name it and it's up. That partly reflects the impetus to asset prices from extraordinary policy stimulus from central banks post the global financial crisis,' he said.
'We're seeing the benefit of the likes of KiwiSaver, and a bit more diversification in terms of where people put their money though housing is still a fair chunk of the balance sheet. However, those wealth gains haven't accrued across the board to everyone.'
He said another barometer of whether people were feeling richer was having enough money to meet their weekly expenses.
'The household savings rate is negative, so for a lot of households there is more money going out the door than what is coming in.
'Though, one reason for a low savings rate could be growth in the value of assets, which means people feel less need to save. I think the low savings rate reflects how expensive New Zealand is to live and there are a few sectors the Commerce Commission should have in their sights.'
Infometrics chief forecaster Gareth Kiernan said, adjusted for inflation, the increase was only 24 per cent over the decade, or 40 per cent in the last five years.
'As Stats NZ have said themselves, the bulk of the increase in assets is due to property and pension funds. It is questionable how much of an effect that either of these assets has on people's feeling of wealth.
'House price gains can only be realised if you sell and don't have to buy again, or are purchasing a cheaper property via downsizing or relocating. The pension fund increases primarily relate to KiwiSaver, which are generally not accessible to households until age 65. Although the positive effects on people's feeling of wealth of either of these asset classes can't be entirely discounted, their effects will be more muted than if people's wealth had increased via other more liquid assets.'
He said the drop in unemployment from 6.7 per cent a decade ago to 3.9 per cent was a bigger contributor to New Zealanders' financial wellbeing.