KEY POINTS:
The slowing housing market is having a chilling effect on household wealth, which fund manager Spicers says could stall after years of strong growth.
Arcus Investment Management chief economist Rozanna Wozniak, who is also an economist for Spicers, said the increase in net worth for the quarter was slightly slower than the 2.7 per cent increase experienced during the previous three months.
With so much of New Zealanders' wealth tied up in housing, Spicers' quarterly Household Savings Indicators survey largely reflects developments in the property market.
However, Wozniak pointed out that the negative effect of a slowing in the pace of house price growth was largely offset by a slight reduction in household's debt accumulation, with liabilities increasing 2.3 per cent over the quarter against 3.2 per cent during the three months to June.
"We hope the cooling in debt accumulation is a taste of things to come, particularly given the uncertain outlook for house prices. If house price growth continues to slow alongside skyrocketing debt levels, declines in net worth would be likely."
At present, the slowing momentum in house price growth meant household wealth was now growing at a gradual pace rather than in leaps and bounds.
"It will be interesting to see what happens next quarter given what we've seen happening to real estate turnover and the median house price. If we saw house prices falling then it would show up as a fall in wealth.
"At this stage it looks like we're heading for a soft landing but the risks surrounding that are on the downside," said Wozniak.
Wozniak said the big gains in household wealth over the past five years had provided most households with a decent buffer.
"It does mean for most people that they are financially pretty secure and are in a position where they can tighten their belts and ride it out if things flatten out."
More vulnerable were those with property investments, households exposed to the property developer/finance company sector, and latecomers to the property market with high levels of borrowing.
Outside of housing assets, New Zealand households' financial assets grew 1.6 per cent during the quarter, similar to the pace during the previous three months. Bank deposits were the biggest driver of that, now having risen 11.7 per cent or $8.8 billion during the year.
OUR ASSETS
* New Zealanders' total household net worth rose 2.6 per cent during the September quarter.
* Total household assets increased 2.5 per cent against 2.8 per cent during the previous quarter, largely as a result of a slowing down in the rate of appreciation of housing stock.
* Total liabilities rose 2.3 per cent.
* Net worth per individual household rose 2.3 per cent to $383,436.
