We're still getting richer
Spicers' latest Household Savings Indicators show the net worth of the average New Zealand household increased by $8,700 during the June 2007 quarter and reached $375,200, up $40,800 for the year.
Tuesday, September 11th 2007, 6:35AM
"The value of existing houses is estimated to have risen 2.7% over the last three months and 13.8% for the year. This is a pretty strong number, although it's slightly below the average quarterly growth rate of 2.9% seen in the past three years."
"The housing boom has boosted household net worth by around $188,000 since late 2001."
Wozniak says signs of a slowing housing market are emerging and progressively smaller gains in household net worth are expected in the future.
"The housing market's strong recovery last spring does not provide reassurance that the current slowdown will be temporary. If anything, we are more concerned. Since then, interest rates have risen along with debt servicing costs and house prices have moved even further out of line with both incomes and rents."
Wozniak says fortunately most households are well placed to weather any storm that develops.
"The unemployment rate is very low and the shift by households into longer term fixed mortgage rates several years ago has provided some temporary protection. Also, debt levels in comparison to housing values are not excessive."
However, she warns it's likely an increasing number of households will experience financial stress. "Scared of missing the boat and being unable to afford a home if they wait, an increasing number of property investors and home buyers have jumped in with little or no deposit over recent years."
"Debt servicing capabilities have been stretched to the limit, leaving little buffer for the unexpected. This is not unlike the behaviour that triggered the US sub-prime crisis."
"However, in New Zealand, it is finance companies rather than the housing market that have, so far, suffered the consequences," Wozniak says.
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