New Zealand scores second on global wealth per capita, and first when adjusted for inequality

New Zealand scores second on global wealth per capita, and first when adjusted for inequality

Update: It seems that Credit Suisse have made a significant error in their report as it relates to New Zealand. They used RBNZ data but converted it to USD using the wrong exchange rate. See this note here.

Rather than being on top of the OECD we actually are in the middle.

Their error undermines the original report as it relates to New Zealand.

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According to a major global survey, New Zealand is the wealthiest country in the world after Switzerland.

Accounting for inequality and converting the results to 'median wealth', New Zealand comes out on top.

The results are reported in the Credit Suisse Global Wealth Report 2015.

The report calculates that adults in New Zealand have an average wealth of US$400,811, the second highest in the world but still well behind Switzerland at US$567,100.

This report uses official RBNZ data for 2014. More than half of that 'wealth' is in housing and land.

New Zealand beats Australia who were in third place at US$364,900.

The good result for New Zealand is surprising as it comes after a substantial reduction caused by exchange rates. In the previous year, Credit Suisse scored average per capital wealth in New Zealand at US$484,400.

Our high 'average wealth' score rises when adjusted to 'median wealth'.

The ranking by median wealth per adult favors countries with lower levels of wealth inequality.

"On the basis of the revised data, we put New Zealand in second place in mid-2014 and conclude that this year its median wealth of US$182,600 displaces Australia (US$168,300) at the top of the list, where it had remained since 2008" the Report says.

Both countries are significantly ahead of third placed Belgium (US$150,300) and the United Kingdom (US$126,500), which moved up to fourth place. Norway follows with median wealth of US$119,600, then Switzerland (US$107,600), Singapore (US$98,900), Japan (US$96,100), Italy (US$88,600) and France (US$86,200).

Despite a rise in median wealth this year to US$49,800, the United States still lags well behind all these countries, although the value is similar to that of Spain and Denmark, and is above the median value of US$43,900 in Germany.

We are top of a very unequal world

To determine how global wealth is distributed across households and individuals – rather than regions or countries – Credit Suisse combine data on the level of household wealth across countries with information on the pattern of wealth distribution within countries. Once debts have been subtracted, a person needs only US$3,210 to be among the wealthiest half of world citizens in mid-2015.

However, US$68,800 is required to be a member of the top 10% of global wealth holders, and US$759,900 to belong to the top 1%.

While the bottom half of adults collectively own less than 1% of total wealth, the richest decile holds 87.7% of assets, and the top percentile alone accounts for half of total household wealth.

We are likely to remain number one

The Report adjusts the usual 'per capita' definition to 'per adult'. Net worth or “wealth” is defined as the value of financial assets plus real assets (principally housing) owned by households, less their debts. This corresponds to the balance sheet that a household might draw up, listing the items which are owned and their net value if sold. Private pension fund assets are included, but not entitlements to state pensions. Human capital is excluded altogether, along with assets and debts owned by the state (which cannot easily be assigned to individuals). For convenience, they disregard the relatively small amount of wealth owned by children on their own account, and frame the results in terms of the global adult population, which totaled 4.8 billion in 2015.

According to this data, 50.3% of all adults in New Zealand are 'middle class" and 72.2% are 'middle class and above'.

The Report also looks ahead to 2020 and concludes that New Zealand will likely retain its top spot for 'median wealth', followed by Australia, and then it is likely to be Sweden.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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I'd rather our country was enjoying positive net cashflows than sitting near the top because of mythical property values.

I've been wondering for some time home resilient our economy will be when the financial bubbles that have formed collapse. If a large number of people are forced to sell due to being over leveraged, and a subsequent outflow of foreign capital in response where our wealth will really stand.

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How classic - ignore the debt, but factor in the unrealised gains... and bingo we're all in the top 10%.

This can only mean one thing - borrow more!!!!!

They are not 'ignoring debt', they are accounting for it. They are just deducting liabilities from the value of the assets counted to get 'net worth' - in exactly the same way the RBNZ defines net household wealth. (In exactly the same way your accountant does it for your IRD tax returns.)

If you can't place a bid at a NZDMO tender without re-locating to a tent, it's basically a load of pretentious nonsense and you are dependent on foreign goodwill and the liquid rich to roll over the national debt.

Oops, quite right .. so we're inflating away our housing debt at the second fastest rate in the world :-).

Seriously though, if NZ has the world's second highest net worth on a per adult basis, there must be some unexplained outlier - like being one of the most over-valued RE markets in the world. And that over-valuation might have something to do with recent past laundered money hitting our shores on a higher per adult basis than in other more populated jurisdictions, and given the launderers paid cash for all that residential RE, we net out better than the rest.

I mean I'd like to think we rank second in the world for net worth with over 70% of our population being in the top 10% of the world's wealthiest individuals, but somehow it just seems rather implausible.

http://www.macrobusiness.com.au/2013/04/ireland-the-greatest-property-bu...

NZ and Australia are doing their best to outdo them.

You may want to look at the Irish Government Debt as % of GDP in the following link to see how things could turn out for NZ.

http://www.economicshelp.org/blog/3118/economics/ireland-national-debt/

Talk about a article of BS. Must be the same crowd that do the least corrupt countries articles.

What is telling is the large gap between average and median wealth in NZ. (even if it is better than most!)

Also worth noting that to have a median annuity at retirement age they calculate 500K US is the base.

They use this as the upper bound noted in their middle class analysis. Surely it the starting place for any level of financial independence.

Taking that as read, then how many can live with any dignity in retirement based on these figures..thats right ,not many..

Makes for sombering reading when placed into any context. At least the baby boomers have super.

I sincerely hope Credit Suisse do not truly believe this means anything- this is taking the total housing then dividing by the number of houses, then making the total unjustified step that houses a evenly spread through society and apply this housing value to a median person. This result is numerical bollocks.

Sounds like the definition of an average to me...

I am surprised that the rest of the world is so poor though.

The average has no particular relationship to the median though, and they don't fall at the same place in the population.

They put the average at $US400k and the median at $US180k, that sounds about right to me.

What a ridiculous article. Thought only the herald used stories like that.

What would be interesting is to know the number of persons in NZ with over $US1m net worth. There must be many tens of thousands, if not more, with property values as high as they are.

I suspect that the number over $US10m would be relatively small however.

Reading the full report, 282,000 is the answer. That is a few more US dollar millionaires than I thought there would be in NZ. (Almost 1% of all the world's millionaires live in NZ)

Over 6% of all NZers are $US millionaires and something about 10% of all adults in NZ are $US millionaires.

New Zealand incomes are laughable. This "wealth" is simply mark to market real estate witchcraft. What the report really means is that New Zealand wins first prize at asset bubbles.

What is the matter with you lot. Don't you realise you live in the best place on earth and people all over aspire to be here. I could have lived anywhere but chose NZ because it is a great place to live and everybody has a chance to succeed if they study hard and work hard. Be proud of this achievement. In Europe Switzerland was the place that we all aspired to live and now NZ will be talked about in the same way.

Not in Auckland, not any more.

Tell this to the homeless adults and poor children in NZ.