Inheritances and their impact on housing equity withdrawl
Housing equity withdrawal (HEW) was very high in New Zealand. In fact it was at unprecedented levels between 2004 and 2007. It has been postulated that a significant proportion of this equity withdrawal could be the result of inheritances, which would have increased in value as house prices rose over the period. This report looks at how much of recent HEW might be due to the sale of inherited dwellings. It briefly surveys earlier work on inheritances in New Zealand, and reviews various sources of data on inheritances. It then uses data from household wealth surveys, together with mortality data, to estimate the value of inheritances in 2001 and 2006. Estimates of the equity withdrawn from inherited houses are also derived. The results suggest that transactions related to inherited houses probably accounted for no more than about one-seventh of the change in net HEW between 2001 and 2006. Clearly other factors more active forms of equity withdrawal accounted for most of the change in HEW over the period.