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Largest q/q household wealth drop in almost 10 yrs

Spicers media release
11 July 2008
(NB: See Spicers latest HSI report [PDF] which is attached)

Largest quarterly drop in NZ household wealth for almost 10 years

Spicers latest Household Savings Indicators report shows household net worth fell 1.2% or $5,900 in the March quarter marking the largest quarterly drop in household wealth for almost 10 years.

In annual terms, net worth rose only 2.0% for the 12 months to the end of March. This is down from the 6.9% growth recorded in Spicers December 2007 Household Savings Indicators report.

Bevan Graham, economic adviser to Spicers, says this outcome needs to be taken in context with the longer term picture.

“Most New Zealand households have experienced strong gains in net worth in recent years.”

“The average net worth of each New Zealand household now sits at $369,249, a 95% increase on ten years ago when the net worth per household was $189,765.”

Mr Graham says the fall in net worth was the combined result of a fall in the value of household financial and physical assets, coupled with a continued increase in household debt levels.

“The value of total household assets fell by $3.4 billion for the quarter - the first decline in more than seven years.”

“This fall was primarily due to weakening house prices during the period and recent falls in the value of managed funds and privately held shares in response to global market volatility.”

On the other side of the ledger, Mr Graham says growth in household liabilities has started to slow.
“HLiabilities rose 2.2% over the quarter compared with a rise of 2.7% during the December quarter. Most of this is attributable to mortgage financing.”

“Households are clearly taking a more cautious approach to borrowing given the clear signs of the housing slowdown.”

Spicers latest Household Saving Indicators report is attached.



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