The household net worth of kiwis dropped by some $179.4 billion in the first nine months of 2022, according to new data from Stats NZ.
The fall represented a decline of 7.4% and was driven principally by a $91.1 billion drop in owner-occupied properties and by a $78.6 billion fall in financial assets, including shares and investment funds.
These changes mean that household net worth at September 2022 of $2,250 billion is now just above the value recorded at June 2021, of $2,237 billion.
To give some needed perspective as well, Between the end of 2019 and the end of 2021 household net worth shot up by over $640 billion.
Net worth is the value of all assets owned by households less the value of all their liabilities.
In terms of the September quarter, the latest available, household net worth fell $56.8 billion, or 2.5%, following similar falls in the March and June 2022 quarters.
The fall in the September quarter was also mainly driven by the decrease in residential property valuations, particularly land. The fall in household owner occupied property assets accounted for $41.6 billion (73.2%) of the fall in net worth since the June quarter.
Stats NZ said the falling property values were also the main cause of the $12.7 billion, (1%) fall in household’s financial assets. Rental property owned by households is recorded within equity assets (property valuation less any mortgage held) as a financial asset.
Partly offsetting this fall in equity assets was a continuation of the rise in currency and deposits held by households, up $2.6 billion (1.1%). In addition, households’ insurance and pension assets saw a small increase following decreases in the previous two quarters.
Household loan liabilities continue to increase, up $2.5 billion (0.9%) this quarter. The rate of increase in household debt has been slowing since the December 2021 quarter. Loan liabilities are composed of household mortgages, and consumer and student loans.
Separately Stats NZ said household saving increased 31.1% to $2.2 billion in the September 2022 quarter, Stats NZ said today.
Household saving shows how much households are saving out of their current disposable income. That is, current disposable income less current spending.
One interesting thing to note is that the figures are starting to reflect the higher mortgage rates now applying. The amount paid in interest in the September quarter topped $3.6 billion, which was the highest amount since the early months of 2009. And yet, the quarterly amount of money taken relative to disposable income remained very low at just 6%. In 2009 the last time the amounts of interest paid were this high the amount of disposable income taken was 14%.
Stats NZ's national accounts institutional sector insights senior manager Paul Pascoe said that increases in incomes have meant that household saving increased during the September quarter, despite price rises and higher interest rates contributing to higher household spending,"
Household net disposable income is the amount of money a household has once all income such as wages, interest, and child support, and outgoings such as taxes have been accounted for. It represents the money available for a household to spend, save, or invest.
Household net disposable income increased by 2.5% to $55.9 billion. Salaries and wages (up 2.3%) and interest received (up 34.1%) were the main drivers of the increase in household disposable income. This increase was partly offset by a 6.1% decrease in the income of self-employed business owners and partnerships (entrepreneurial income).
Household spending was up $825 million (1.6%) in the September 2022 quarter. This followed a 2.1% fall in the June quarter. Spending was up across the board, with increased spending on durables (such as clothing and footwear), non-durables (such as food and drinks) and services (such as housing, power, and gas).
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