Housing gains create 'fool's paradise'
The continuing housing boom means households are still increasing their net worth at a strong rate, but also spending more than they gain.
Tuesday, June 7th 2005, 8:31AM
by The Landlord
This is leading to a "fool's paradise" perception of wealth, says Spicers Wealth Management, publisher of the quarterly survey on household net worth.The report for the March quarter showed wealth increased 3.2 per cent to an average of $243,000 a household, driven largely by a 4.6 per cent increase in the value of houses. However, household debt increased 3.9 per cent in the quarter.
Households have been spending more than they earn every year for a decade.
The average household's net worth went up $20,000 in the year to March 31, and $75,000 in the past three years. This has mostly gone to homeowners.
"Unfortunately, this perception of wealth may be a fool's paradise for anyone looking for an excuse to keep spending and not putting money aside for retirement," Spicers chief economic adviser Rozanna Wozniak said.
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