Inflation in New Zealand: $100K then, now and later
Year after year prices creep up, and while it might not feel dramatic day to day, the long-term impact is huge. Over decades, inflation quietly eats away at what your money can buy, turning what once felt like a fortune into something far less impressive.
$100,000 sounds like a lot of money today, but what will it really be worth in 30 years? If you look back, you’ll see how dramatically things have changed. In the mid-90s, $100,000 could buy a family home in many parts of New Zealand. Today, it barely covers a deposit in most regions. And in another 30 years? The picture gets even tougher.
This is why understanding inflation is so important for your financial future. Because if your money isn’t working for you, it’s losing value. In this article, we’ll break down how inflation has changed the cost of living, what that means for the future, and most importantly, what you can do to stay ahead.
$100,000 Then vs Now: A Reality Check
1995: Strong Purchasing Power
In 1995, $100,000 was a significant sum with considerable purchasing power. It could cover a large portion of a family home deposit in many regions of New Zealand, pay for a mid-range vehicle, and still leave enough for living expenses or other financial priorities. This level of money allowed people to make meaningful financial choices without needing to borrow heavily.
At the time, the median house price in New Zealand was approximately $150,000, meaning $100,000 could cover roughly two-thirds of a home’s cost.
Source: Te Ara – The Encyclopedia of New Zealand
2025: Eroded Value
Fast forward 30 years to 2025, and the same $100,000 has far less impact. In many parts of New Zealand, it now covers only a small fraction of a home deposit, and while it could still purchase a brand new mid-range vehicle, it no longer stretches as far for other essential expenses. Everyday items like groceries, fuel, and coffee have also increased in price, further reducing the real value of that $100,000.
The median house price in 2025 is approximately $909,671, meaning that $100,000 now only covers about 11% of a typical home’s cost, highlighting how much purchasing power has been eroded by inflation and rising living costs.
Source: QV House Price Index – July 2025
2055: Looking Ahead
If current trends continue, by 2055 the median house price could reach approximately $1,800,000. At that point, $100,000 would represent just around 5–6% of the cost of an average home, illustrating how significant inflation and market growth can be over multiple decades.
This projection underscores a key point: keeping money in cash over the long term significantly erodes its purchasing power, making investing a necessary strategy to protect and grow wealth.
Understanding Inflation
Inflation is the general increase in prices over time, which reduces the value of money. In New Zealand, average annual inflation over the past 30 years has been around [insert %], though certain periods saw spikes due to economic events, housing market pressures, and global factors.
Even modest inflation compounds over decades. Money that seems substantial today may buy much less in 30 years if left uninvested. Understanding inflation is crucial for planning financial goals, preserving wealth, and securing a comfortable retirement.
The Real Cost: 1995 vs 2025
Examining concrete examples makes the impact of inflation clear. Here is a snapshot of what $100,000 could buy in 1995 compared to 2025. These figures clearly show that $100,000 in 1995 had far more purchasing power than $100,000 today, making it evident that relying solely on cash savings is insufficient for long-term financial security.
| Item | 1995 Price | 2025 Price | Notes |
|---|---|---|---|
| Median House Deposit | $100,000 (median house ~$150,000) | $100,000 (median house ~$910,000) | $100K could cover ~66% of a home deposit in 1995; today it only covers ~11% |
| Mid-range New Vehicle | $25,000 | $45,990 | $100K could buy four cars in 1995; today it buys just over two |
| Cup of Coffee | $1.74 | $5–$6 | Price has more than tripled over 30 years |
| Grocery Basket | $86.61 | $186.37 | Typical food basket roughly doubled in cost over 30 years |
NZ Herald Article: ‘How much did groceries cost in 1994’
Future Projection: 30 Years Ahead
Looking ahead, inflation will continue to erode the value of money if left uninvested. Assuming an annual inflation rate of 2–3%, $100,000 sitting in cash today could be worth approximately:
$54,548 in 2055 dollars (2% annual inflation)
$40,101 in 2055 dollars (3% annual inflation)
These projections demonstrate the importance of strategic investment. Without it, money loses value, reducing the ability to achieve long-term goals such as home ownership, funding education, or building a retirement nest egg.
How Investments Can Outpace Inflation
Investing provides a way to preserve and grow wealth over time, protecting against the silent erosion of money by inflation. Several options are available in New Zealand:
KiwiSaver Funds
KiwiSaver offers diversified investment options ranging from conservative to high-growth funds. Over the long term, KiwiSaver funds have consistently outpaced inflation, making them a critical tool for retirement planning. Historical returns show that staying invested through market fluctuations yields significant growth over decades.
Investment Funds
Investing in managed funds or a diversified portfolio of shares allows money to grow beyond inflation, though with varying levels of risk. Over the long term, equity markets have delivered returns well above the average rate of inflation, making them a reliable option for building wealth.
Even modest, consistent investing can significantly improve financial outcomes. For example, investing $100,000 in a [insert fund type] over 30 years could grow to [insert projected value], maintaining purchasing power and potentially increasing it substantially.
The Importance of Early Action
The earlier money is invested, the more it benefits from compound growth, which is the process of earning returns on both the initial investment and accumulated returns over time. Starting early allows for steady growth, reduces the need to take excessive risks later, and ensures that financial goals remain achievable despite inflation.
Delaying investment can have a dramatic impact. Even a few years’ delay in starting to invest can mean hundreds of thousands of dollars less in eventual wealth accumulation, which can affect retirement planning, property purchases, or other long-term goals.
Key Takeaways
$100,000 in 1995 was far more powerful than today. Inflation has eroded its value significantly.
Cash alone cannot preserve wealth. Money left in a bank account loses purchasing power over time.
Investing is essential to outpace inflation. KiwiSaver, managed funds, shares, and property provide options to grow wealth long-term.
Start early and stay invested. Time and compound growth are powerful tools in building financial security.
Tailor investment strategy to goals. Whether preserving capital, matching inflation, or outpacing it, your strategy should match your objectives and risk tolerance.
Next Steps
Inflation is a silent but powerful factor in wealth erosion. The most effective way to counter it is through strategic, long-term investing. Take the following steps:
Review your current financial situation and assess whether your savings and investments are keeping pace with inflation. Even if you are invested, some funds barely keep up with inflation. So ensure you have your money in a fund that is performing well if outpacing inflation is important to you.
Get professional advice from a financial adviser to tailor a strategy to your goals. Reach out to us and we can help you build wealth that can aim to outpace inflation and grow with the changing times.
Commit to investing regularly, using tools like KiwiSaver or investment funds, to grow your wealth steadily over time can help ensure your purchasing power in the future is not reduced too significantly.
By taking proactive steps, you can ensure your money not only retains its value but grows to achieve long-term financial security. Inflation doesn’t have to dictate your future investing wisely can.
Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.
