Kiwis' wealth boosted by homes

By Felicity Anderson, Nzoom.com Business News Editor

Thursday 23rd May 2002

The recent increase in house prices has pushed up the "net worth" of New Zealand households.

The average Kiwi household is now worth $2,344 more than March last year at $151,809.

On a per capita (person) scale that's $53,801 or $69,453 per adult.

The figures are part of the finding in the latest WestpacTrust Household Saving Indicator.

For the three months to the end of March, household net worth rose $1.3 billion (0.6%) to $290.7 billion, the indicator shows.

That's 2.7% higher than for the same time last year.

A rise in the value of houses has driven the increase. But Kiwis' increased appetite for debt is keeping a lid on real worth.

Take out the value of their houses and add the debt kiwi households owe and the "financial net worth" of New Zealand households only increased $257 million for the three months.

The survey, done by NZIER and Morningstar, shows a $2.7 billion increase in the value of the housing stock in the three months pushing that value 3.9% higher than a year ago.

Donna Purdue, a WestpacTrust economist, warns however, that the recent rise in interest rates and the threat of more to come, is likely to curb housing demand over the second half of this year and curb house price increases.

The value of financial assets stayed relatively flat over the three months as a rise in cash and term deposits was offset by a fall in managed funds and privately held shares.

But the savings indicator shows the value of financial assets is still 4.4% higher than at the end of March 2001.

Households borrowed an additional $1.6 billion in the March 2002 quarter up 7.8% from a year ago. And it went on houses according to the indicator.

Alex Sundakov, director of NZIER, says the growth in household borrowing remains a concern.

"At some point households are going to have to repay the debt they have built up and with interest rates now on the rise, that time is likely to come soon.

"This will act as a constraint in consumption growth and hence GDP (gross domestic product) going forward."

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