Households are an average $20,000 richer than they were a year ago, a quarterly survey by Spicers Wealth Management has found.
Spicers household savings indicators recorded a a 3.3 per cent increase in households' net worth - their assets minus their liabilities - in the March quarter, making 11 percent for the year, as the rising value of the housing stock easily outstripped increased borrowing.
The value of the housing stock nationwide rose $16.3 billion or 4.6 per cent in the quarter, explaining all of a $16 billion or 3.3 per cent increase in the value of household assets.
By contrast, households' financial assets fell slightly, largely because of a drop in the value of shares. Over the March year, rising house values accounted for 90 per cent of a 14.6 per cent increase in household assets.
The debt side of the balance sheet has been growing even faster in percentage terms, with borrowing up 3.9 per cent in the March quarter and 14.8 per cent for the year. Spicers chief economic adviser Rozanna Wozniak said in dollar terms the $16 billion increase in assets easily outpaced the $4.6 billion rise in debt. Homeowners' rising wealth had turbocharged consumer spending during the past couple of years.
"Unfortunately, this perception of wealth may be a fool's paradise for anyone looking for an excuse to continue spending and not put money aside for retirement," Wozniak said.
"An estimated 88 per cent of housing is tied up in owner-occupied homes and cannot easily be unlocked in retirement. It is not that easy to trade down to somewhere cheaper."
She said the continued rise in nationwide indicators of house prices masked considerable regional differences.
In hot spots such as Auckland City, Wellington, Nelson and Queenstown, house prices had either levelled off or edged lower in the past six months. It was the smaller cities, which were slower to take off, that were holding up the national average. Wozniak said without an employer subsidy, the KiwiSaver scheme unveiled in last month's Budget would do little to lift retirement savings.
"It sounds more like a first home owners' scheme, with a retirement savings option tagged on."
