New Zealand’s richest people might be getting wealthier, but the same can not be said for the rest of us.
The National Business Review released its annual rich list this week, which showed the country’s wealthiest people are collectively worth morethan $100 billion, up from $95.55 billion last year.
But over 2024, the net worth of all households declined by $4.185 billion.
Infometrics chief forecaster Gareth Kiernan said average household wealth had fallen since the end of 2021, which was unsurprising given that housing made up about half of household assets.
He said the super-rich would have a smaller proportion of their wealth in property.
“If you look at the numbers during 2024, aggregate (gross) financial assets went up 1%, while aggregate housing and land value went down 0.8%. Or since the end of 2021, aggregate financial assets went up 7.5%, while aggregate housing and land value went down 8.6%. So the more of your money during that time you’ve got in financial assets, and the less in housing, the better you will have done.
“Of course, the portfolios of the super-rich are probably not going to be as simple as financial vs property assets - often they will have a higher-than-average concentration of their assets in companies that they directly or indirectly operate and/or control. This exposure or concentration doesn’t mean that they are immune to market fluctuations, but it potentially provides them with a measure of control not available to retail investors, whose best strategy to minimise their risk is to have a diversified portfolio.”
He calculated the average household net wealth was $1.2 million but said that average was pulled up “massively” by the wealthiest households. New data is due from Stats NZ in August, but in 2021, the median wealth was $397,000. Those aged 25 to 34 had median net worth of $34,000 and those aged 35 to 44 $117,000.
Simplicity chief economist Shamubeel Eaqub agreed financial wealth had increased - boosted by growing KiwiSaver balances - but housing wealth had dropped and debt had increased, leading to lower net worth overall.
“It’s not so much that nothing has improved because financial markets have actually created a lot of wealth, it’s our highly leveraged bet on property that’s held us back.”
He said the richest people in the country would probably have made more of their money from businesses. “A lot of them will have ultra-successful businesses, so it’s a big bet on some things and then once you’ve got wealth, it’s often professionally managed.”
More KiwiSaver members would now be reaching a stage where their returns were going to supercharge their balances. Photo / Getty Images
But he said more New Zealanders now had professionally managed money than ever before with KiwiSaver and other managed funds. “So there’s a glimmer of good news in there, but I think that’s kind of largely offset in the last few years at least by what’s been happening with house prices and continued borrowing.”
More KiwiSaver members would now be reaching a stage where their returns were going to supercharge their balances, he said, rather than growth relying largely on contributions.
“Once you’ve got enough savings then your money starts to work for you. The returns from your existing investments will be much more than how much you contribute from your income. That’s the magic point, the inflection point.”
