KEY POINTS:
Household wealth over the past few months has fallen by the largest amount in nearly 10 years, says new research from financial advisers Spicers.
The report, released this morning, shows household net worth fell 1.2 per cent or $5,900 in the March quarter.
On an annual basis, net worth rose 2 per cent for the 12 months to the end of March down from the 6.9 per cent growth recorded in its December 2007 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 per cent increase on ten years ago when the net worth per household was $189,765."
He said 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, Graham says growth in household liabilities has started to slow.
"Liabilities rose 2.2 per cent over the quarter compared with a rise of 2.7 per cent 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."
- HERALD ONLINE
