The Labour Party says New Zealanders are "drowning" in mortgage debt after new data showed 87 per cent of all personal debt in this country is tied up in property.

Even middle income earners were now "mortgaged to the hilt" as house prices rise faster than incomes, housing spokesman Phil Twyford said today.

He made the comments after Statistics New Zealand reported that real estate loans dominated total individual debt in New Zealand in the year to June.

"Hundreds of thousands of Kiwi families are sending an ever increasing portion of their income to the Aussie banks each week, leaving them with less to live on," Tywford said.


"They are so indebted that for many even a slight increase in interest rates could send them underwater."

Mortgage holders aged between 25 and 44 years old owed an average of $145,000, and those aged between 45 and 64 owed an average of $107,000.

One in ten people had not paid off their family home before retirement age, the figures showed.

However, this was partly because some had loans in investment properties.

Statistics New Zealand said most New Zealanders had enough assets to offset their debt - the average New Zealander had 12 cents of debt for every dollar in assets.

People in the 15 to 24 year-old age group, who were less likely to own property, had the highest debt-to-asset ratio, owing 47 cents for every dollar of assets.

Those in the 34 to 44-year-old age group had just 26 cents of debt for every dollar of assets.

Other types of debt were dwarfed by the money owned on mortgages.

Student loans made up just 6 per cent of total personal debt and other debts, such as loans on consumer products, made up just 7 per cent.

In all, half of New Zealanders over 15 years of age were in debt. The average Kiwi owed $79,000.

Statistics New Zealand said the study was a one-off and it was not possible to immediately compare changes in real estate debt over recent years.