Spicers HSI - June 2006
- Download Spicers Household Savings Indicators - June 2006
Media release
Net Worth Posts Smallest Annual Rise in Four Years
Household net wealth increased by 2.2 per cent for the quarter, meaning the annual rate of increase dropped to 9.8 per cent, its lowest rate in four years. This was largely due to reduced gains from housing.
Average net wealth per household increased $6,200 to $342,000 in the quarter.
Arcus Investment Management Chief Economist Rozanna Wozniak says house prices are the main component of the Spicers Household Savings Indicators and the reliable, but little reported, quarterly index of house prices released by Quotable Value showed only a 1 per cent increase in the June quarter. That contrasted with more widely reported monthly data that indicated continued strength in the housing market.
The improvement between the June and September quarters reflects an accelerated housing appreciation to an estimated 2.0 percent in the September quarter, up from a modest 1.0 percent rise in the June quarter. While this may seem a significant improvement, the last two quarters housing appreciation figures are in fact the weakest results in the last five years.
Debt continued to rise at a faster pace than asset values for the third consecutive quarter.
“Some households may already be slipping backwards,” says Arcus Chief Economist, Rozanna Wozniak, “particularly in areas such as Whangarei, Gisborne, Hastings, Napier, Nelson, Central Otago, Queenstown Lakes, Dunedin and other centres where house prices declined during the June quarter.
“This marks a dramatic turnaround from the heady pace of 2005 and early 2006. Furthermore, economic fundamentals suggest that the housing market remains vulnerable.
“The last five years have mistakenly led us to believe that rapid gains from housing have always been the norm. In fact, the last five years have been the exception.
“What short memories we have. There have been prolonged periods in the past where house prices have stagnated and even declined. For example, in the 10 years to June 2001, house prices in Invercargill declined by 26 per cent in real terms (that is, after adjusting for inflation). During the two decades spanning the 1960s and 1970s, national house prices declined in real terms. The 30 years ending June 1991 delivered an annual, real gain averaging just 0.4 percent per year.”
Editor’s note: Arcus Investment Management manages investment funds for Spicers. Arcus and Spicers are both subsidiaries of AXA New Zealand.
Download Spicers Household Savings Indicators - June 2006 Report
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Spicers Household Savings Indicators - Methodology
For further information contact:
Rozanna Wozniak, Chief Economist Arcus Investment Management
027 283 727