by Paul McBeth
New Zealand households may now be feeling the pinch of higher interest rates and a dip in wealth, said NZIER director Alex Sundakov today.
Sundakov was speaking at the release of WestpacTrust's latest Household Savings Indicators, which are compiled by NZIER and Morningstar. He said that this feeling was consistent with the trend in retail sales growth, "which has shown signs of more subdued household activity recently".
Although household liabilities rose by $5.6 billion or just over nine per cent in the year to March, that apparently marks a significant slowdown in borrowing growth. Meanwhile, the overall value of household assets remained steady as rising house values offset the sharemarket decline.
For the sixth quarter in a row, the annual growth in managed funds topped that of short-term deposits at financial institutions. Managed funds assets increased in value by $2.1 billion, or 5.6 per cent, over the year to March.
WestpacTrust said that the net worth of New Zealand households had effectively stagnated over the last four years, with aggregate net worth of around $253 billion now at much the same levels as in mid 1996. Net worth fell by $0.6 billion or 0.2 per cent in the March quarter and is now $5.3 billion (two per cent) lower than a year ago.
See our last story for more on the impact of slower home lending on the mortgage rate outlook