Key Points:

A new report shows the net worth of the average New Zealand household fell by $14,500 in the September quarter.

It followed a decline of $17,000 the previous quarter.

Spicers' Household Savings Indicators report says the average household net worth is now just under $356,000, nearly $40,000 down from a year earlier.

Aaron Hing from Spicers says the decline in New Zealanders' assets was driven almost entirely by declines in house prices and lower growth in housing stock.

He said people are reining in their spending and borrowing.

However, there is an up-side.

Spicers CEO Gordon Noble-Campbell said New Zealanders are taking positive steps to manage their debt as they reduce consumption-fuelled borrowing based on rising house prices.

"Households are wisely much more wary of taking on new liabilities in the current economic climate."

Households are moving to less volatile income assets such as cash, term deposits and Cash PIE funds.

Mr Noble-Campbell said this is encouraging, particularly if the trend strengthens.

"With more than 80 per cent of our wealth tied up in residential housing, it's great to see more New Zealanders starting to value the benefits of diversification by investing in a wider range of financial assets."

"Also, on the upside, is the potential for "cashed up" investors to return to equity markets when the recovery comes with the possibility of picking up some bargains on the way," he said.