Falling house prices and plunging investment have eaten away at household wealth, while inflation and rising interest rates are prompting consumers to limit their spending.
Data from Stats NZ showed New Zealand household net worth fell by $88.9 billion in the three months to June, down 3.7% from the previous quarter.
Net worth is the value of all assets held by households minus the value of all their liabilities.
Senior director of institutional sectors Paul Pascoe said net worth fell 5.2% in the first half of the year as property values and stock markets fell.
“The falls undo some of the gains made in 2021 when household net worth rose [but] was still above the December 2020 level.”
More than half of the decline in net worth in the June quarter was due to the decline in the value of owner-occupied real estate, while the value of financial assets, such as stocks, pension funds and investment and rental properties, accounted for much of the rest.
One of the counterparts was the increase in currency and deposits.
Meanwhile, households took in pay rises and spent less, leading to a $2.1 billion growth in household savings.
“The decline in household spending partly reflects reduced purchases of durable goods, such as used cars and electronics,” Pascoe said.
Household savings fluctuated due to economic volatility caused by the pandemic and associated disruptions, he said.
“While household incomes have remained relatively stable, household spending has risen and fallen as consumption behavior has changed in response to rapidly changing economic conditions, resulting in larger movements in the household savings in recent quarters.”