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Household Net Worth Statistics: Year ended June 2015
Embargoed until 10:45am  –  28 June 2016
Commentary

This release provides a picture of the net worth (wealth) of New Zealanders, by looking at their household assets – financial and non-financial – and their liabilities.

See data quality for more details on the concepts and methods we used.

Household and individual net worth

Median New Zealand household net worth was $289,000 in 2014/15. The median value of household assets (what is owned) was $400,000, and the median value of liabilities (what is owed) was $51,000.

The median net worth of individuals was $87,000. The median value of an individual's assets was $160,000; the median value of an individual's liabilities was $28,000.

Distribution of net worth

Household net worth is not distributed evenly

Graph, Distribution of household net worth, by net worth bands, year ended June 2015.

The graph illustrates there is a larger proportion of households near the lower end of net worth. Five percent of households had negative net worth, and the largest proportion of households (25 percent) had a net worth between zero and $100,000. At the higher end of the distribution, 8 percent of households had a net worth above $1.5 million. This is why the mean ($631,000) is greater than the median value ($289,000).

Twenty percent of households (the top quintile) accounted for around 70 percent of total household net worth. In contrast, 40 percent of households (the bottom two quintiles) owned just 3 percent of all household wealth.

Graph, Household net worth, by quintile and broad component, year ended June 2015.

The top 10 percent of New Zealand households accounted for around half of total net worth. This is a wealth pattern consistent with the OECD average across countries for which data is readily available. The top 1 percent of New Zealand households had 18 percent of total net worth – the same as the OECD average, but slightly higher than in Australia (where the top 1 percent has 13 percent of net worth).

Graph, Wealth shares of households in selected OECD countries – top percentiles, 2010 or latest available year.

Individual net worth is more concentrated

The concentration of wealth for individuals in the top percentiles increased slightly over the past decade. In 2014/15, the top 10 percent of individuals accounted for around 60 percent of net worth, compared with the average of around 55 percent from the Survey of Family, Income and Employment (SoFIE) collections between 2003 and 2010.

Measuring net worth distribution

Graph, Wealth shares of individuals – top percentiles, HES compared with SoFIE.

An alternative way of looking at the (in)equality of net worth distribution is to consider the ratio of mean (average) net worth to median net worth. This is a simple measure of wealth inequality; a value greater than one indicates that most households have net worth less than the average. The larger the ratio, the more the distribution of net worth is concentrated in the wealthy. As the graph below shows, New Zealand is in the middle of the OECD distribution for this measure.

Graph, Mean to median household net worth ratio, 2010 or latest available year.

Wealthy households have a bigger share of financial assets

Higher quintile households had a greater share of their assets in financial assets (which includes cash and deposits, shares, equity in trusts and businesses, and other financial investments). Approximately two-thirds of household assets for the top quintile were accounted for by financial assets; for other quintiles, the figure was around 20 percent.

Graph, Distribution of household assets, by quintile and broad component, year ended June 2015.

Looking at a more-detailed asset breakdown, the ‘other household financial assets’ category (which includes shares, equity in trusts and businesses, and other financial investments) accounted for most of the difference between quintiles. This category made up over half of the top quintile’s total assets.

Graph, Distribution of household assets, by quintile and component, year ended June 2015.

The difference reflects the ability of the higher quintile households to invest in financial assets, due to their lack of debt (relative to lower quintile households), as shown in the graph below.

Graph, Household liabilities as a proportion of total assets, by quintile and component, year ended June 2015.

Less well-off households owe as much as they own 

The relatively high debt for households in the bottom quintile is reflected in the fact that for every dollar of asset a household in the bottom quintile owned, there was a liability of just over a dollar. This contrasted with the highest quintile, which had only four cents of liabilities for every dollar’s worth of assets.

 Ratio of household liabilities to household assets by net worth quintile
 Year ended June 2015

 Assets ($)

 Liabilities ($)

 Quintile
 1

 1

 1.07

 2

 1

 0.44

 3

 1

 0.29

 4

 1

 0.16

 5

 1

 0.04

 Total households

 1

 0.12

The concentration of financial assets in the higher quintiles is illustrated by the Lorenz curves for the asset types. A Lorenz curve is a graphical representation of the distribution of wealth, represented in the example below by household assets. The cumulative percentage of each household asset is plotted against the cumulative percentage of the population. The diagonal 45 degree line represents a hypothetical situation where wealth is equally shared among all members of the population. The extent to which the curve sags below this line indicates the degree of inequality of distribution.

We see the ‘other financial assets’ category has by far the most-unequal distribution, reflecting the concentration of this asset type in the top quintiles. In contrast, real estate ownership is much more evenly distributed – for those who own property.

Graph, Lorenz curves for household assets, by cumulative percentage of households, year ended June 2015.

The house we live in is our biggest asset

Just over half (51 percent) of all New Zealand households own the house they live in. Almost one-third (30 percent) of a household’s total asset value is this house. This does not include dwellings owned through trusts or businesses.

For households that own their own homes, the home's median value tended to increase with the household’s net worth quintile. While the median house value for households in the bottom quintile was $219,000, it was $617,000 for those in the top quintile.

Graph, Median value of owner-occupied dwellings and mortgages, by household net worth quintile, year ended June 2015.

Nearly three in five (56 percent) New Zealand households living in their own home had a mortgage; the median mortgage was $172,000.

As expected, households in the lowest net worth quintile had a lot more debt on their houses than those in the higher quintiles.

Most debt tied up in housing

For every one dollar of assets, New Zealand households had 12 cents of debt in 2014/15. These liabilities included mortgages, education loans, and loans for items such as furniture and cars.

Almost all household debt was tied up with property. Unsurprisingly, mortgages for the home people were living in made up most household debt – over 60 percent of all household liabilities. The next-largest amount of debt was from loans for other real estate – almost one-quarter (24 percent) of all household debt.

Graph, Proportions of total household liabilities, by liability type, year ended June 2015.  

Other real estate held by households

More than 1 in 10 (14 percent) of New Zealand households own real estate other than the home they live in.

Holiday homes, timeshares, commercial and residential investment properties, and land are part of the ‘other real estate’ category. This accounted for 16 percent of the total non-financial assets held by New Zealand households, and 8 percent of their total household asset value.

Of the households that own other real estate, 6 in 10 (60 percent) had an outstanding loan on the property. The median mortgage for these properties was $167,000.

The median value of other real estate was $285,000. Not surprisingly, those in the highest net worth quintile also had the highest median value – $420,000 worth of other real estate.

Property in trusts

Other than property held directly by New Zealand households, some property (both owner-occupied and other property) was held through family trusts. About 12 percent of owner-occupied dwellings were held by trusts.

The proportion of New Zealand households living in owner-occupied dwellings increases to 59 percent (from 51 percent) when we include dwellings owned by a trust. 

One-fifth of households are involved with trusts

Almost one-fifth of New Zealand households (19 percent) had involvement in a trust (322,000 households). This means at least one household member was involved as a settlor, beneficiary, trustee, or with another type of involvement, but excludes those who are only independent trustees.

For households with assets in their trust, the median value of those assets was around $700,000. For households that had liabilities in their trust, the median value of those liabilities was close to $300,000. These values are quite large as a big proportion of trust assets and liabilities relate to farms and owner-occupied dwellings.

 Household asset and liability holdings in trusts by households
 Year ended June 2015
 

 Median

 Mean

 Total

 

 $(000)

 RSE

 $(000)

 RSE

 $(million)

 RSE

 Assets

 683

 28

 1,693

 25

 276,229

 30

 Liabilities

 297

 52

 804

 48

 48,527

 58

See data quality for information on how trust wealth was distributed, and how we collected data on trusts.

We collected several demographic characteristics at the individual level. This allows us to make observations about the net worth of individual people. We now look at two of these characteristics (age and ethnicity).

Net worth increases with age

Median individual net worth increases with age. Young people (15–24 years) had the lowest median individual net worth ($1,000), and older people (65+) had the highest ($288,000).

Generally, older people have accumulated net worth over their life time. They tend to own their own home outright or have retirement savings by the time they reach retirement age. This is why, on average, their net worth tends to be higher than for other age groups. 

Graph, Median personal net worth, by age group, year ended June 2015.

Younger people are more heavily indebted, with 15 to 24-year-olds having debt of around 50 percent of the value of their assets, on average. Most of this debt is for education loans, which accounted for 70 percent of young people’s debt. Not many young people own their own home – only 2 percent of young people live in a house they own; they had less than 1 percent of the total assets held in owner-occupied dwellings.

People aged 25 to 44 years old had, on average, debt of around 30 percent of the value of their assets. Although they accounted for around half the total education loans, they also had mortgage debt – 90 percent of their debt related to property.

Individuals aged 45 to 64 years continued the trend of paying down their debt, reducing it to around 10 percent of the value of their assets in 2014/15.

By the time people are 65+, most of their debt is paid off. Residual debt accounted for around 2 percent of their total assets. Two-thirds of this debt was associated with mortgages on the house they lived in – 9 percent of people aged 65 + still had a mortgage to pay.

Graph, Individual liabilities as a proportion of total assets, by age group, year ended June 2015.

Individuals aged 45 to 64 years had the highest proportion of total assets held in owner-occupied dwellings (48 percent). They also held half of all pension and superannuation savings in New Zealand. This could be because the closer a person is to retirement, the more they tend to have saved, partly through having had more time to establish their nest egg.

Ethnicity differences appear for net worth

Since wealth increases with age, the wealth profile of ethnic groups will be affected by their differing age structures. This makes direct comparisons between ethnic groups misleading. To mitigate the effects of the Māori and Pacific populations having a much younger age structure than the total population, we have adjusted for age through age standardisation. The graph below shows how age standardisation affects the median net worth of ethnic groups.

All statistics analysed by ethnicity referred to in this release, including the tables, are age standardised.

Graph, Median net worth, by ethnic group, year ended June 2015.

Even after removing the effects of age on the ethnicity data, it is evident there was a large difference in the median net worth of European people, compared with other ethnic groups. The median net wealth of European people was $114,000, more than three times that of the Asian population ($33,000), five times that of Māori ($23,000), and nine times greater than Pacific people ($12,000). These are individual assets only, and do not include other ownership arrangements (eg Māori collective assets).

For more detailed data see the Excel tables in the ‘Downloads’ box.

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