by Paul McBeth
Groan. It's definitely official: the estimated net worth of New Zealand households has fallen 1.3 per cent (around $2.8 billion) over the June quarter.
Rising debt levels and falling house prices have done the damage, according to the latest WestpacTrust Household Savings Indicates compiled by NZIER and Morningstar. Our collective net worth was $5.4 billion at June 30, 2.5 per cent lower than a year ago.
However, WestpacTrust Financial Services general manager Girol Karacaoglu took a positive squint at some of the numbers. Unusually, the value of short-term cash and deposits held at financial institutions was down nearly $1 billion or 2.3 per cent over the quarter.
"There is normally a steady positive flow of savings into short-term deposits each quarter, but this outflow is potentially quite revealing about an underlying change in household behaviour," Girol said.
"It looks as though some of this money has been redirected towards other forms of investing including managed funds, longer-term fixed interest securities and offshore equities. If this is genuine long-term investment money rather than short-term savings chasing higher yields, then it is an encouraging sign."
Households borrowed an additional $960 million over the three months to June, a 1.4 per cent increase that took total borrowings for the year to just above $5 billion. The overall value of household assets fell by 0.7 per cent, largely because of a provisional 1.0 per cent fall in house prices.
Paul is a staff writer for Good Returns based in Wellington.
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