Kiwis wealthier thanks to dollar

Photo / File

Strong growth in the New Zealand dollar and increasing property values have translated to a boom in personal wealth for Kiwis, according to a new global wealth report.

The Credit Suisse Global Wealth Report 2014, released yesterday, found personal wealth for New Zealanders had grown by more than 300 per cent since 2000 - more than any other country rated.

The measure was based on the exchange rate, property values and individual debt.

However, when the effect of the change in exchange rate was removed over the 14-year period, "growth in wealth per adult" dropped to just above 100 per cent - placing us 13th out of the 20 countries ranked.

According to local budgeting and economic experts, the scaled-back result is more reflective of what is happening.

Raewyn Fox, chief executive of the Federation of Family Budgeting Services, said there had been no evidence of wealth growth among the 52,000 families the service worked with. "Maybe there is a different section of the population whose wealth is growing but they won't be coming to a budgeting service.

"We are seeing a gap between those who have wealth and those who don't widening.

"Basically, as some people get wealthier, others seem to be more strapped for cash."

Despite this, the report - which also looked at inequality - found the amount of wealth owned by the top 10 per cent of Kiwis had declined slightly over the 14-year-period, from 62.3 per cent in 2000 to 57 per cent this year.

It also noted the growth in wealth for New Zealand was largely caused by "favourable currency movements". In 2000, the New Zealand dollar was trading at about US40c.

Yesterday, the local currency was trading at US78.33c.

BNZ chief economist Tony Alexander said the exchange rate was a huge factor given its US40c starting point.

"Also our house prices are above pre-global financial crisis levels, whereas oversupply-induced falls have left prices in many other countries lower," he told the Herald.

"Our gross domestic profit is also well above pre-global financial crisis levels, whereas some other countries have gross domestic profit lower or only just above [the pre-global financial crisis levels]."

Wayne Thompson, Teuila Fuatai