The wealth of Kiwi households is taking a bit of bruising, particularly from falling house and land values - but savings rates are proving remarkably resilient in the face of high inflation.
On the latter point, it is significant to note that the disposable incomes of Kiwi households actually rose at a faster rate in the December quarter than the rate of spending - in other words income increases were outstripping inflation.
According to new data from Stats NZ, the value of owner-occupied properties fell during 2022 (year to December) by $93.2 billion (about 7%) to $1,232 billion. The rate of decline did actually slow during the last quarter of the year, however (down about $12.3 billion).
In total there was an annual fall of $176 billion, or 7.3%, in the total net worth of Kiwi households to $2,251 billion from the peak in December 2021, according to Stats NZ's national accounts institutional sectors senior manager Paul Pascoe.
"The total net worth of households was $2,251 billion in December 2022."
On the savings situation, Pascoe said New Zealand household saving was $2.1 billion in the December 2022 quarter, the same level as in the September quarter but well above pre-pandemic levels.
Household net disposable income increased by 1.8% to $57.4 billion in the December 2022 quarter, while household spending increased by 1.7% to $55.3 billion.
Pascoe said the increase in household spending largely reflected price increases, as there was little change in the volume of goods and services consumed by households during the December 2022 quarter.
"The total disposable income of New Zealand households increased at a slightly higher pace than the rise in living costs."
Stats NZ describes household net disposable income is the amount of money a household has once all income receivable (such as wages, interest earned, and child support) and income payable (such as taxes and interest paid) have been accounted for. It represents the money available for a household to save, invest, or spend.
During the quarter household income receivable rose $2.1 billion to $80.2 billion (2.6%), driven by interest received on bank deposits (up 28.2%), salaries and wages (up 1.2%), and dividends (up 37.8%).
Household income payable rose $1.1 billion to $23.1 billion (4.9%), driven by interest payable and income tax. Interest payable rose 23.9% reflecting increasing interest rates on housing loans during the quarter, while income tax paid increased by 3.4% aligned with the continued growth in salary and wages'
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That $93 billion was only ever a notional figure that could only be made real by a transaction - selling it in other words.
And given the way our financial system is set up, that means someone else had to take on $93 billion worth of Debt to do the deal.
So let's look on the bright side. That's $93 billion less Private Debt we've taken on as a country.
(NB: Yes. Some have the capacity to press a key on their bank account and transact the deal for 'cash'. But very few in the grand scheme of things. And if this article shows us anything, it's that there are likely to be less of those cash-payers as each day passes)
Mapped: How Global Housing Prices Have Changed Since 2010 (visualcapitalist.com)
So there is a long way to fall, because NZ is just not that special......
Left those Aussies in our dust! They don't even crack a mention in the Top 20 whereas we... are Number 3!
From the housing prices of countries listed above, the data can point to the emergence of potential housing bubbles in Iceland, New Zealand, and Canada. However, bubbles are usually only fully identified and measured after they have burst.
We are a podium winner in Stupid House prices......
Now most countries will revert to some form of long term mean, it will be highly corelated to the cost of Wholesale cost of Funds, and the ability of borrowers to reasonably meet payments ie DTI.
You can clearly see why so many young NZers want to goto Aussie, higher pay and lower house prices....
Yes all those horrible things, and its full of Australians, and still 5000 of our nurses have registered to be able to work there......
You can go and come back later once things are better here, if ever.... and many young people will do just that, hope you have your own superannuation plan TTP or did you Step it UP
Friend at private hosp. Telling me today how their specialists are getting head hunted with top dollars - making it very difficult to say no. Many are from overseas and finding the deterioration of NZ society, crime, attitudes etc quite depressing.
They wont need nurses soon - as thy wont have the surgeons etc to do the ops.
Within a few years NZ has gone from an acclaimed destination to a place to keep away from.
Its not just the $ they need to worry about in retirement IT guy, their will be no one here to wipe their nose or help them shower if their health turns on them, it's already a major hurdle. My mother works in a retirement village, and she herself is 72 and going to have to retire soon, and the stories of under staffing is sad indeed.
PFFFFFFFT ! ... the sound of our property bubble deflating ...
ARRRRRRRGHHHHH !... the sound of overleveraged investors & those who were late to the party ....
BOOOOOYAAAAHHHH ! .... the sound of first home buyers , friends and families ... regular Kiwis who need a home ...
The old rule that 100 ounces of gold could by the average London house....
Two major price drivers will form the bottom
- What buyers can afford to pay for private dwellings
- The yield based returns on housing after tax vs other investment opportiunities. (Capital gains will become speculation once DTIs are invoked). And there will be a large overhang of past investors at higher prices constraining growth.
I believe (correct me if I am wrong) there was an introduction or increase of minimum price for alcohol over the last 10 years to push prices higher and decrease consumption considerably due to the cost and effects of alcoholism in NZ by intentionally making it unaffordable to drink. So house prices have risen at the same pace as an industry intentionally put in a stranglehold. Makes for a good "back in my day!"
A tide of change is coming and that is what you fear
The earthquake is a coming, but you don't want to hear
You're just too blind to see
Have you seen the writing on the wall?
Have you seen that writing?
Can you see the riders on the storm?
Can you see them riding?
Can you see them riding, riding next to you?
2.25 Trillion is a lot of money. Considering there are roughly only 1.9 million households in New Zealand.
That's 1.18 million in wealth per household. But 33% of households rent so they probably don't have a million in assets. The 3500 households in emergency accommodation almost certainly don't have any assets.
The 120,000 New Zealand children living with material hardship are probably not living in a household with a million dollars of assets. But their care givers probably pay rent to someone who does. With the help of a government subsidy of course. How else could they afford to pay.
Something is wrong with the stats. 2.25 trillion divided by 5 million = around 500K per person in NZ net worth. That is obviously wrong. I think the figure is total assets could be 2.25 trillion, but debt has not been deducted. So, this is not a net figure. Not surprisingly these figures come from the Stats department.
It's real. The 2.25 net trillion takes account of all the liabilities. Mortgages, Consumer loans, Student loans etc. It does include the value of houses and land owned by households.
With the provisos
Housing and land
The value of housing and land excluding rental properties and vacant land. Rental properties are notional unincorporated businesses and the assets and liabilities appear on the business sector balance sheet. Data is Statistics New Zealand estimates from the Annual Balance sheets statistics.
Household net wealth
Household net financial wealth plus the value of housing and land.
This seems like a very typical NZ belief - 'if you don't own houses, you don't have significant value in assets'. I have a lot more in assets than your quoted number and I own zero real estate. Lots of people like me. Perhaps you aren't factoring that in, and that's why your stats are skewed.
The total net worth of all the housing is much like the deposits in a bank......
If everyone wants out at the same time, there is not actually much there.....
I think that Orr has actually done all he needs to do, UNLESS CPI continues to just not drop.... I can see him pausing now, and I think it will be clear to all in about 3-6 months that a global recession is rolling across NZ....
IMO measuring house prices adjusted for inflation doesn't make sense. Data should be kept as it is, unless of course you're working with data to look at different relationships.
https://tradingeconomics.com/new-zealand/housing-index
Regardless, the price of gold far outstripped NZ house prices during that period. Very few people would have owned gold at that time.
Reading the figures. Do they even relate to actual household income in any way or is it just a total dollar figure divided by the number of households. Just looks to be horribly twisted in the direction of high earners. For instance it points to households having $25k plus of descretionary spend. Dividends and interest recieved rose 25%+ but what percentage of households actually gain anything appreciable from that.
"On the latter point, it is significant to note that the disposable incomes of Kiwi households actually rose at a faster rate in the December quarter than the rate of spending - in other words income increases were outstripping inflation."
No.
This conclusion doesn't necessarily follow because spending is the product of both price and volume.
So if incomes rise 5%, but spending rises 4%, comprised price +7% and volume -3%, then you can say income is outpacing spending, but you can't say the increase in income is outstripping inflation.
Journalistic rigor is one of few things in structural deflation.
Harry Dent a year ago on TVNZ: NZ house prices will drop 30-50%:
(149) Global economist Harry Dent's startling predictions for NZ and the world | AM - YouTube
At 4.19+ Ryan Bridge is talking over him and all like "Harry, you're scaring the punters", "Harry, I do want to point out that you haven't always been right".
Whose crying now.
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