House Prices and Wealth Inequality in New Zealand

Abstract

This article discusses the relationship between house prices, the wealth distribution and wealth inequality. It considers long-term changes in overall wealth distribution in New Zealand and the share of wealth that is held in the form of housing. It also explores the potential impact of large increases in house prices using a ‘scenario’ approach – modelling the effect of house price growth scenarios on the 2018 wealth distribution and, in turn, wealth inequality, while holding all else constant. The article shows how looking at headline measures can obscure changes in wealth inequality between groups. It also reinforces the value of complementing such analysis with measures that illustrate other dimensions of wellbeing.