$37,000 net gain for homeowners

"There is little doubt that most New Zealanders who own residential property have been laughing all the way to the bank," chief economist Rozanna Wozniak said.

Higher housing values were providing consumers with a false sense of security., she said. "Most of our wealth is tied up in owner-occupied housing and can't be easily unlocked in retirement."

If housing was removed from the calculations, net worth for the average household rose just $7800 for the year and $1600 for the quarter.

The financial net worth, including assets except housing, increased just 0.5% during the quarter and 4.8% for the year.

Despite negative signals Ms Wozniak said the economy would not crash and the forecast 5% to 10% decline in house prices would still leave most homeowners significantly better off, Ms Wozniak said.

"The magnitude of wealth gains enjoyed by consumers during the last three years should provide a decent buffer."

The biggest positive contributor to financial assets in the quarter was a $1.7 billion increase in bank deposits, although this was largely offset by a $900 million decrease in the value of private shareholdings.