Ōtepoti – Total household debt increased 29 percent from the year ended June 2018 to the year ended June 2021, Stats NZ say.
Household debt or liabilities is the amount of money borrowed from another party, like mortgages, student loans, and debt on credit cards.
Mortgage debt on the family home, which increased by 30 percent from 2018 to 2021, was the main reason for an increase in total household debt.
Other real estate loans also contributed to the increase, rising 44 percent.
Property debt represents 89 percent of New Zealand’s total household debt, not including properties held in a trust. Debts on the primary residence accounts for 66 percent of total household debt.
Consumer durable loans, education loans, and other loans and liabilities remain at similar levels to 2018, and together make up the remaining 11 percent of total household debt.
While only 32 percent of households have a mortgage on the primary residence, for those households the median property debt increased to $260,000 in the year ended June 2021, up $56,000 over the three years.
This means that half of New Zealand households with a mortgage have a debt on their house of less than $260,000 and the other half has over $260,000 worth of property debt.
Median owner-occupied dwelling assets, as assessed by councils’ rateable value, increased from $435,000 in the year ended June 2018 to $550,000 in 2021; up $115,000 over the three years.
Classification of households by income shows that those in lower income quintiles tend to have smaller debts, which may reflect constraints on their ability to borrow, for instance to take out a mortgage.
It is also notable that those in the lowest 20 percent of income earners hold similar levels of debt to those in the next quintile.
The survey data shows households which have larger incomes are borrowing more to purchase assets, particularly a home.
Looking at debt for individuals over the age of 15, rather than households, average individual debt has increased 24 percent since 2018.
Home loans have increased significantly since then, with an average debt of $188,000 per person. This is an increase of $37,000 in the last year three years.
