Property assets and debt drive changes in wealth

Property assets and debt drive changes in wealth – Media release

14 December 2018

For typical households owning the home they live in, the value of their home rose almost $100,000 over the last three years, Stats NZ said today.

Median property assets for people’s homes were up from $350,000 in the year ended June 2015 to $448,000 in 2018. Household debt associated with our homes also increased. Median property debt for people’s homes increased from $172,000 to $206,000 (up $34,000) over the three years.

“Because many people’s main asset is the house they live in, changes to the value of residential property has a big impact on household net worth,” labour market and household statistics senior manager Jason Attewell said.

Net worth measures the value of all the assets a household owns, including property and savings, less all the debts, such as mortgages and credit card debt.

The median value of household assets increased from $400,000 to $496,000 (up 24 percent) in the three years to June 2018. During the same period, household debt remained unchanged at about $42,000 in the year to June 2018, and household net worth rose 18 percent, to a median net worth of $340,000.

For most households, the amount of property debt for each dollar of property asset held remained stable or reduced over the three years to June 2018. However, for households in the lowest 20 percent of the net worth distribution, the debt per dollar of asset, specifically for the home they live in, increased from $1.10 of debt to $1.75.

“While the amount of debt a household holds is important, for wealth, it’s the size of the debt in relation to the size of the assets that determines a household’s net worth. Households with the lowest net worth now have more debt per dollar of asset in the house they live in than three years ago,” Mr Attewell said.

These latest statistics, gathered from the Household Economic Survey (HES), help describe the net worth of New Zealand households in the year ended June 2018. Net worth statistics are a key indicator of the economic well-being of New Zealanders – for example, they provide information on wealth inequality and how prepared New Zealanders are for retirement. We collect information about net worth every three years.

HES is not designed to measure total wealth but helps to understand the distribution of net worth across the population.

Annual balance sheets: 2017 (provisional) released on 10 December 2018 provides a measure of total household net worth.

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