Home purchases taking vast majority of New Zealand debt

Just over half of New Zealanders over the age of 15 were in debt last year, with real estate loans accounting for 87 percent of total individual debt, the government statistics agency said Thursday.

The debt analysis report by Statistics New Zealand also showed some older people had debts on real estate even as they went into retirement age.

Real estate loans were well offset against property assets, with 29 cents of debt for every dollar of real estate assets.

Education loans accounted for 6 percent of debt and other loans, including loans on consumer durables, investment-related loans, for 7 percent.

The average debt was 79,000 NZ dollars (57,480 U.S. dollars), but the age group with the highest average debt of 109,000 NZ dollars (79,308 U.S. dollars) was those aged 35 to 44.

People in the 35 to 44 and 45 to 54 age groups combined carried about 55 percent of the country's total household debt.

The main opposition Labour Party said the figures showed New Zealanders were taking on record levels of debt in order to get into the country's runaway housing market.

"Kiwis are drowning in debt as even middle income families mortgage themselves to the hilt to get a foothold in a runaway housing market," Labour's housing spokesperson Phil Twyford said in a statement.

"They are so indebted that for many even a slight increase in interest rates could send them underwater."

The Reserve Bank of New Zealand has repeatedly warned that soaring home prices, particularly in the largest city of Auckland, are a risk to the country's financial stability.

An economic forecast from the Business New Zealand lobby group on Wednesday warned that households appeared to have "partially forgotten the lessons of the past" and household debt levels were rising "precipitously." Endit