Kiwis’ net wealth and savings fall as housing slump takes toll

Kiwis' net wealth is falling after being boosted by Covid stimulus. Photo / Getty Images

New Zealanders are less wealthy and saving less as house prices fall and pandemic stimulus is reversed, according to new data from Stats NZ.

However, household net disposable income actually rose 2.3 per cent to $58.2 billion - driven by higher wages and salaries, and interest received.

Our collective household net worth fell $42.7b, or 1.9 per cent, in the March 2023 quarter, the fifth successive fall, according to the figures released today.

The property market slump is the primary driver of the decline although the bearish share market didn’t help our KiwiSaver balances and retirement funds.

The data shows the value of financial assets also fell, by $8.3b.

Net worth is the value of all assets owned by households less the value of all their liabilities.

The total household net worth in New Zealand is now $2.207 trillion.

“The main contributor to the net worth decline was a fall in owner-occupied property values, which were down 2.6 per cent,” national accounts institutional sectors senior manager Paul Pascoe said. “Declining property values have also led the falls in net worth in three of the previous four quarters.”

Annually, household net worth fell $175b, or 7.3 per cent in the year ended March 2023, following a period of accelerated growth up to the December 2021 quarter.

A rise in household loans of $2.1b also contributed to the decline in net worth although the rate of growth in household borrowing has also slowed in recent quarters.

Nationally our collective rate of savings also declined as we dipped into our accounts to cover higher living costs.

Saving fell to $653 million in the March 2023 quarter, an $874m decline from the December 2022 quarter’s $1.5b, according to Stats NZ.

”New Zealand households saved less, as their spending increased at a faster rate than their disposable income,” Pascoe said.

Household spending increased by 3.9 per cent, driven primarily by increases in spending on services such as international travel.

Household net disposable income rose 2.3 per cent to $58.2b.

“This increase was driven by wages and salaries (up 3.7 per cent), and interest received (up 18.4 per cent),” Pascoe said.

“Offsetting these were an increase in interest payable (15.1 per cent) and a decrease in dividends receivable (down 19.4 per cent).”

Household net disposable income is the amount of money a household has once all income such as wages, interest and child support, and income payable such as taxes have been accounted for. It represents the money available for a household to save, spend, or invest in housing.

The household saving ratio, which compares household saving to net disposable income, fell to 1.1 per cent from 2.7 per cent in the December 2022 quarter.

The surge in net wealth and subsequent decline is still very much a reflection of the pandemic stimulus measures undertaken by the Government and Reserve Bank through the pandemic which boosted the overall money supply.

That is now being reversed as central banks look to reduce the money supply and remove inflation from the economy.

Stats NZ uses a different time frame to get a median figure for individual household wealth.

But notes that for the year ended June 2021, the median net worth of New Zealand households was $397,000; up 21 per cent from $328,000 for the year ended June 2018.

Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist as well as presenting and producing videos and podcasts. He joined the Herald in 2003.