New data reveals 5.2pc households owe more than they own

In June 2015, first-home buyers made up 38 per cent of $462 million of mortgage lending. Photo / Hagen Hopkins

A new government data set shows about 5.2 per cent of New Zealand households owe more than they own at a time when low interest rates have made borrowing more attractive.

As at June 30, 2015, 4.6 per cent of the country's 1.67 million households had a net worth of between $0 and negative $100,000 and 0.6 per cent were in even deeper negative equity, Statistics New Zealand's household net worth figures show. The report is the first of a new series, which the agency last touched on during a longitudinal study through last decade.

While not comparable on a like-for-like basis, the earlier series shows fewer than 50,000 of New Zealand's 975,000 families were in negative equity in 2004, while 6 per cent, or 22,900, of individuals living alone and 18 per cent, or 43,800, of individuals living with others owed more than they owned.

Negative equity was a major concern for Reserve Bank governor Graeme Wheeler when he imposed restrictions on bank lending with small deposits in 2013 in an effort to avoid the harm caused by the sub-prime crisis in the US in 2007 where aggressive lending left many households underwater.

Those restrictions immediately saw a drop-off in first-home buyers, though Reserve Bank figures yesterday showed those purchasers accounted for almost half of the $496 million of high loan-to-value ratio mortgage lending last month.

In June 2015, first-home buyers made up 38 per cent of $462 million of mortgage lending where less than 20 per cent of the purchase price had been offered as a deposit.

Since then, mortgage rates have fallen to a one-year fixed rate at 4.38 per cent as at June 24, compared to 5.15 per cent a year earlier, according to interest.co.nz, while at the same time house prices have accelerated as a shortage of supply fails to meet growing demand backed by record inbound net migration.

Today's report shows the median net worth of a household was $289,000, of which housing and mortgage debt were typically the biggest components.

A quarter of the country's households had a net worth between $0 and $100,000, and a further 11 percent between $100,000 and $200,000. About 15 per cent had net assets worth more than $1 million, more than half of which were worth more than $1.5 million.

Statistics NZ said the concentration of wealth had increased since 2005, with the top 10 percent of individuals owning around 60 per cent of total net worth, compared to the average 55 per cent between the 2003 and 2010 period spanning the longitudinal Survey of Family, Income and Employment.