Here’s what you need to be in New Zealand’s top 1% – Stuff

Simon Maude/Stuff

You need quite a few of these to make it into the wealthiest 1%.

While recent research showed most New Zealanders would fit into the worlds wealthiest 10%, to get to the top of the wealth tree in this country is a bit harder.

Stats NZ data shows that in the year ended June 2021, the top 1% of New Zealand households had at least $7.59 million of net wealth thats assets minus any debt held against them. To be a 1% individual, you would need net wealth of $3.866m.

Internationally, the top 1% is US$1.147 million (NZ$2.059m).

NZCTU economist Craig Renney said the increasing value of land and housing were part of the reason that people ended up with that level of wealth.

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He pointed to Reserve Bank data showing that the value of housing and land had risen nearly 600% since June 2001.

Stats NZ had also noted that the top 10% of households had 50% of New Zealands net worth, something that had not changed since records began in 2015.

Wealthy households were seeing bigger increases in the value of their wealth than the rest of the country.

The median net worth of the wealthiest 20% of households lifted $313,000 to $2.02m in the year to June 2021 but the median net worth of the bottom 20% only lifted $3000, to reach $11,000.

Renney said New Zealand was unusual in not having any tax designed to address wealth imbalance, such as capital gains tax, inheritance tax or land tax.

This not only drives poor economic outcomes we put too much of our income into unproductive assets such as housing it locks in inequality.

FINANCE AND EXPENDITURE COMMITTEE

Revenue Minister David Parker faces taxing questions over IR's wealth study at a select committee in July.

But Infometrics chief forecaster Gareth Kiernan said it was less clear that house prices were a big factor in wealth accumulation.

A paper by Treasury last year showed that wealth inequality when house prices rose and the wealthiest 10% had a higher proportion of their wealth in assets that were not housing.

It would seem reasonable that if someone has made their money in business or other investments, that they would continue to utilise those assets they have been successful and are familiar with - notwithstanding being open to the benefits of diversification), he said.

For example, if I have had a successful start-up business that I have grown and sold, Im probably then going to look at other business opportunities I can invest in to grow and sell.

Similarly, if I have been successful in borrowing and growing my wealth through property, Im probably going to continue that model, which implicitly has quite a lot of debt associated with it because of how much leveraging tends to go on with large investors.

In income terms, he said, a top 20% household in 2019 would have been earning at least $199,400 a year. That is up from $136,000 in 2007.

In 2021, the average household income was $110,451.

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Here's what you need to be in New Zealand's top 1% - Stuff