The mask of prosperity doesn’t quite match the face underneath, writes Nick Stewart.
Last night was Halloween, a celebration of masks, illusions and things that appear frightening but aren’t real.
How fitting, then, to discuss New Zealand’s latest economic costume: the world’s fifth-wealthiest country per capita, according to Allianz’s latest Global Wealth Report.
Each Kiwi is apparently worth $617,000 on average. Pop the champagne, right? Not quite.
The mask of prosperity doesn’t quite match the face underneath. Most New Zealanders are too busy checking their bank balances and wincing at grocery receipts to celebrate this dubious honour.
At a recent conference abroad, colleagues from other nations questioned why New Zealanders exhibit such a “small dog complex” about our economy and stock market when we rank so highly in global wealth tables. “You must be a very wealthy nation,” they observed, puzzled by our apparent lack of confidence. Their bewilderment was understandable -on paper, we look remarkably prosperous.
But the disconnect between this glowing statistic and daily financial reality reveals something troubling about how we measure prosperity - and exposes an uncomfortable truth about New Zealand’s economic decline. Our “complex” isn’t insecurity. It’s realism.
Napoleon reputedly dismissed Britain as “a nation of shopkeepers”; a merchant class focused on trade rather than grand imperial pursuits.
If the French emperor were observing New Zealand today, he might call us “a nation of residential landlords”. We’ve become obsessed with buying and selling houses to one another. We treat property as our primary investment vehicle and wealth-creation strategy.
That impressive $617,000 wealth figure is overwhelmingly driven by this fixation: property values. Strip out real estate, and New Zealand tumbles to eighth place in net financial assets. This matters enormously – housing wealth is fundamentally different from productive wealth.
If you own a $1.2 million house in Auckland, congratulations on being wealthy on paper. But alas, you can’t pay for petrol with housing equity. That “wealth” is locked away, inaccessible unless you sell and move somewhere cheaper (which, in New Zealand, means moving to Australia). Meanwhile, you’re servicing a massive mortgage at interest rates that peaked above 7%.
For those who don’t own property, the inflated housing market represents the opposite of wealth. It’s a barrier that pushes homeownership further out of reach with each passing year.
We’ve become experts at shuffling residential properties between ourselves while creating little new productive value. The resulting “wealth” is a mirage. It makes the statistics look good while leaving people feeling financially squeezed.
Here’s where the wealth ranking crumbles entirely. New Zealand’s GDP per capita tells a completely different story. In the 1950s, it ranked third globally in GDP per capita. Today? We’ve plummeted to 37th.
GDP per capita – which measures actual economic output and productivity – sits more than 20% below the OECD average. The Productivity Commission noted we should be 20% above that average given our policy settings, but we’re achieving the exact opposite. As one economist bluntly put it: “We may be punching above our weight, but that’s only because we are in the wrong weight division.”
In 2024’s economic performance rankings, New Zealand placed 33rd out of 37 OECD countries. We beat only Finland, Latvia, Turkey and Estonia. Per capita output has been declining since December 2022.
These are not the statistics of a wealthy, thriving nation.
When you lay bare these numbers, Kiwis’ so-called “small nation complex” makes perfect sense. We’re not suffering from false modesty; we’re experiencing economic reality that the wealth rankings fail to capture.
The wealth figures also conveniently ignore what we owe. New Zealand and Australia have seen their debt ratios surge by 15.2 percentage points to reach 113% of GDP. High asset values paired with equally high debt levels mean many households are drowning in mortgage payments, leaving little for savings or discretionary spending.
The Reserve Bank was among the world’s most aggressive in raising interest rates, and the economy has faltered accordingly. Per capita output has contracted while unemployment climbs. Firms are downsizing. This is the lived experience behind the statistics - and it bears no resemblance to the fifth-wealthiest nation on earth.
The long view is sobering. New Zealand has been growing significantly slower than other OECD countries for six decades. We’ve dropped from elite economic status to below-average performer. Our isolation, small market size, and weak productivity growth have compounded into structural disadvantages that successive governments have failed to overcome.
The wealth ranking highlights our problem. We’ve substituted asset appreciation for genuine economic growth. Rather than building productive capacity, improving wages or fostering innovation, we’ve watched house prices soar and called it prosperity.
Those British shopkeepers at least sold goods to customers beyond their shores. Our landlords primarily rent to each other.
For individuals navigating this challenging economic landscape, the disconnect between headline wealth and financial reality makes professional guidance more critical than ever. Understanding the difference between illiquid property wealth and accessible financial assets, managing debt strategically in a high-interest environment, and building genuine financial resilience requires expertise beyond newspaper headlines.
Working with a qualified financial adviser who operates under a fiduciary duty – i.e. is legally obligated to act in your best interests – can help cut through the noise. Whether you’re trying to balance mortgage stress with retirement savings, questioning if your “wealth” is working effectively, or simply wondering why the statistics don’t match your bank account, professional advice tailored to your specific circumstances is invaluable.
The gap between perception and reality has never been wider. Kiwis understand what the statistics obscure: you can’t eat your house equity, and paper wealth means nothing when your purchasing power is eroding.
What my international colleagues mistook for a national inferiority complex is actually clear-eyed recognition of our economic challenges. In uncertain times, sage financial counsel from a trusted fiduciary adviser isn’t a luxury. It’s essential for turning illusion into genuine security.