HOUSEHOLD NET WORTH

The re-ranking of people that occurs when net imputed rent is added to income results in a change in their household net worth characteristics at different points along the income distribution.

Figure 6.2 shows that, in 2005-06, the mean net worth of households in the lowest and second income quintiles decreased by 27% and 10% respectively when net imputed rent was added to income, because some owners without a mortgage (and therefore with a large net worth) are re-ranked into a higher income quintile. The mean net worth of households in the third income quintile remained unchanged, while the mean net worth in the fourth and highest quintiles increased.

The distribution of net worth across income quintiles becomes more unequal when net imputed rent is added to income (see table 6.3). Before net imputed rent is included in income, the households in which the 20% of people with the lowest household incomes live account for 15% of total household net worth. This share declines to only 9% when net imputed rent is added to income. This decrease in the share of net worth for households in the lowest income quintile is consistent with the decrease in the incidence of households who had full ownership of their home following the addition of net imputed rent to income.

6.3 Share of net worth, by income quintile, 2005-06
	Percentage share of total net worth
	By quintile based on equivalised disposable household income	By quintile based on adjusted equivalised disposable household income, incl. imputed rent
	%	%
Lowest	14.8	9.2
Second	12.8	12.8
Third	15.3	15.9
Fourth	18.1	19.6
Highest	39.1	42.5
All households	100.0	100.0
Second and third deciles	12.0	10.7

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