Falling property prices and plunging investments have eaten into household wealth, while inflation and rising interest rates have consumers reining in their spending.
Stats NZ data showed the net worth of New Zealand households fell $88.9 billion in the three months ended June, down 3.7 percent on the previous quarter.
Net worth is the value of all assets owned by households less the value of their liabilities.
Institutional sectors senior manager Paul Pascoe said net worth was down 5.2 per cent in the first half of the year as property values and share markets fell.
“The falls reverse some of the gains made during 2021 when household net worth increased [but] was still higher than the level at December 2020.”
More than half the fall in net worth in the June quarter came from falling property values for owner-occupied property. The value of financial assets, such as shares, pension and investment funds and rental properties accounted for much of the rest.
One offset was the increase in currency and deposits.
Meanwhile, households have been banking pay rises and spending less, resulting in a $2.1b growth in household savings.
“The decrease in household spending partly reflected reduced purchases of durable goods, such as second-hand cars and electronics,” Pascoe said.
Household savings had fluctuated as a result of the economic volatility caused by the pandemic and associated disruptions, he said.
“While household incomes have remained relatively steady, household expenditure has moved up and down as consumer behaviour has changed in response to rapidly changing economic conditions, resulting in larger movements in household saving in recent quarters.”
