Housing propels NZ's wealth: Are you in the 1%?

Auckland’s house price rise outpaced the world last year, Knight Frank said.
Auckland’s house price rise outpaced the world last year, Knight Frank said.

New Zealand’s growing house prices are helping propel the population to among the wealthiest in the world, a new report shows.

Property consultancy Knight Frank has released its wealth report for 2021, which is designed to assess how the fortunes of “ultra-high net worth individuals” are changing and where they are likely to spend their time and money.

Head of research Liam Bailey said the way governments had responded to Covid-19 had supported the wealthy.

The number of ultra-high net worth individuals, defined as those people who have net wealth of more than US$30 million (NZ$40.7m) including the value their own home, was 2.4 per cent higher over the past 12 months, to more than 520,000 worldwide.

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In New Zealand in 2015, there were 158,782 people with net wealth of more than US$1m. In 2025 that’s predicted to hit 359,251. Last year it was 208,384.

The number at the top of the tree with more than US$30m is predicted to increase from 1904 last year to 2886 in 2025.

The report’s model predicts the global population of ultra-high net worth individuals will grow by 27 per cent over the next five years, and the number of US dollar millionaires is forecast to rise by 41 per cent.

While the US would remain the dominant “wealth hub”, Asia would have the fastest growth in super-rich over the next five years, the report said, at 39 per cent compared to a 27 per cent global average.

By 2025 Asia would be home to 24 per cent of the world’s super-wealthy, up from 17 per cent ten years earlier.

There are more billionaires in Asia than anywhere else in the world. China was driving that, with 246 per cent growth in the number of very wealthy people expected in the decade to 2025.

House prices were rising because of the pandemic, not despite it, the report said, and New Zealand was leading the pack.

Auckland had the fastest-rising house prices of the 100 cities surveyed in the report, up 18 per cent in 2020.

Knight Frank said the country’s handling of the pandemic, rapid economy recovery, “ultra-low mortgage rates” and limited supply of stock were behind the surge.

In the next three places were Shenzen, up 13 per cent, Seoul up 12 per cent and Manila up 10 per cent.

ANZ chief economist Sharon Zollner said house prices were a big driver of New Zealanders’ wealth because property was a favoured asset class for many people. “There are lots of structural reasons for that, including the marginal tax rate advantage that housing has. There’s a huge amount of household debt and wealth in the housing market and that goes right up to the top 1 per cent.”

The net wealth needed to join New Zealand’s “top 1 per cent” is now US$2.8m, the report said, which is the fifth-highest in the world behind Monaco, Switzerland, Untied States and Singapore.

It is also US$80,000 more than needed in Australia, although Zollner said that could be affected by interest rate calculations.