New Zealanders have surpassed the world for the biggest annual increase in wealth, but a prominent economist warned that the numbers were further evidence of growing inequality in a country experiencing a “rise of the landed gentry.”
The global wealth report from investment bank Credit Suisse shows that New Zealand experienced the largest spike in average wealth per adult, exploding from $114,000 (NZ$193,248) in 2020 to bring the total average wealth per adult to $472,153 by 2021. bring — a year of 32% year-on-year increase.
There were 347,000 people in the country with more than $1 million to their name in 2021, the report said. About 2.1 million New Zealanders – out of a total population of just over 5 million – are among the top 10% of global wealth owners. About 281,000 of those are in the top 1%.
Of the $114,000 increase the report noted, 60% came from housing, while the other 40% was due to global financial markets doing well, said Shamubeel Eaqub, a leading New Zealand economist.
“The rise in house prices is extraordinary,” he said. “But with only about half of New Zealand adults owning their own homes, “the increasing wealth was very unevenly distributed.”
Eaqub calls it the “rise of the landed gentry, with wealth and housing opportunities becoming more heritable”.
New Zealand has been plagued for years by a runaway housing market. The cities of Wellington and Auckland have some of the least affordable real estate markets in the world, and home ownership rates have been declining in all age groups since the early 1990s, but especially for those in their 20s and 30s. House prices rose during the first two years of the pandemic, while wages stagnated. By August 2021, house prices had risen by 25% in the past 12 months alone, on top of already exceptionally high prices.
The problem with focusing on the averages and aggregates of these kinds of numbers, Eaqub added, was that it missed the growing divide between tenants and owners, and New Zealand’s haves and have-nots.
With about two-thirds of New Zealanders’ wealth in housing, it wasn’t surprising that housing wealth boomed during the pandemic, Eaqub said, adding that just because the market is slowing now “doesn’t mean those inequalities aren’t continuing.” to be. ”
The Credit Suisse report paints a broad picture of individual wealth around the world, with the number of “ultra high net worth” (UHNW) people — or those with assets over $50 million — growing by 46,000 to a record high last year. from 218,200 in 2021 when the super-rich took advantage of rising house prices and booming stock markets.
“The sharp rise in financial assets resulted in an increase in inequality in 2021,” the bank’s report said. “The increase in inequality is likely due to the rise in the value of financial assets during the Covid-19 pandemic.”
The number of people in the UHNW bracket has increased by more than 50% in the past two years.
New Zealand was followed by the US, Australia, Canada and Taiwan. Those who suffered the biggest losses were Japan, Italy and Belgium.