While the Government has crowed about its success in keeping the economy afloat during the biggest crisis of a generation, not everyone's benefitting.
Household wealth is on track to increase $800 billion in just two years thanks to ballooning asset prices. It increased $402 billion in the year to March 2021, rising almost as much in 12 months as it had in the previous four years put together.
And it's on track to do the same again, economist Cameron Bagrie told The AM Show on Tuesday.
"By any benchmark, that is absolutely off the charts. You're talking numbers here that are around two times the size of GDP or the general economy."
The result - at least for those who own property and other assets inflating in price thanks to the Reserve Bank's record-low interest rates - is they feel richer and are more likely to spend, which Bagrie says "has been a pretty big part of getting the New Zealand economy back on track".
"The worry is that… the massive dichotomy between the haves and the have-nots. We've got what's called the K-shaped recovery. Some parts of society, if you've been on that property or asset price ladder, you've benefited tremendously from low interest rates and asset prices moving up."
Those on the upper spoke of the K are doing well, while the rest experience potentially long-term financial struggles, experts say, as it reinforces "structural trends" such as income inequalities between different ethnicities and reinforces "greater corporate monopolies".
While asset price growth drives spending and job creation - unemployment recently dropping to a record low 3.4 percent - the rest of New Zealand is not only missing out on getting rich, they're facing rising costs.
"Inflation is the thief that's turned up at our doorstep. It's stealing people's money, it's making people worse off. We need to rein in inflation. How do you rein in inflation? You force interest rates up," said Bagrie.
"Central banks are going to be facing a real tightrope balancing act going forward - you can't afford to crush asset prices because you'll crush the economy, but you need to go hard on the interest rate front to slow the economy sufficiently to get inflation back down, because otherwise inflation is going to hurt middle- to low-income families across New Zealand."
While falling asset prices might hurt the economy, Bagrie suggests owners will hardly notice if it's not too drastic.
"A portion of New Zealand is sitting on an $800 billion asset price gain in the last two years - if asset prices go back by 10 percent it's a bit of a drop in the bucket.
"I think in the next 12 to 24 months there is a massive amount of pent-up demand courtesy of what we call the wealth effect that is going to continue to support the New Zealand economy over the next 12-24 months. That's going to be pretty hard for the Reserve Bank to rein in… to get inflation pressures down."
Instead, Bagrie says the Government might have to step in to help low- and middle-income families, lest they get further and further behind those collecting their rent payments.
