New Zealand households have become poorer, overall, for two quarters in a row.

Falling house prices and a weaker share market have reduced New Zealand households’ net worth, Stats NZ data shows.

The net worth of households fell $88.9 billion, or 3.7%, in the June quarter.

It is more than twice the $40.2b fall in the March quarter. The two quarters of declining wealth come after ten consecutive quarters where household wealth increased.

Net worth is the value of all assets owned by households, like houses and other investments, minus the value of all their liabilities, such as home loans.

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“Household net worth dropped $129b, 5.2% during the first half of 2022 as property values and share markets fell,” Stats NZ national accounts, institutional sectors senior manager Paul Pascoe said. 

“The falls reverse some of the gains made during 2021 when household net worth increased $427.6b. Despite the last two quarters’ falls, household net worth of $2347b was still higher than the level at December 2020 of $2048.b.”

Over half of the $88.9b fall in household’s net worth in the June 2022 quarter fall was driven by falling property values for owner-occupied property, down $48.4 b or 3.7%. 

Household financial assets fell $37.5b during the June 2022 quarter. These include ownership of shares, rental properties, investment funds and pension schemes including KiwiSaver, and deposits.

But households built up things such as savings accounts and term deposits.

House price falls outweighing interest rate rises

CoreLogic head of research Nick Goodall explains how house price falls are making the market more affordable for first-home buyers

“New Zealand households spent less in the June 2022 quarter, while also experiencing steady income growth. The decrease in household spending partly reflected reduced purchases of durable goods, such as second-hand cars and electronics,” national accounts institutional sector insights senior manager Paul Pascoe said.

In the June quarter household incomes grew 1.6% to $54.9b. Wage and salary increases were the largest factor contributing to income growth. However, increased government assistance, such as benefits and tax credits, and income of self-employed business owners and partnerships also contributed.

Infometrics principal economist Brad Olsen said the asset price falls that had reduced household wealth were “not done yet” because house prices were still falling, and the share market was yet to stabilise. “Interest rates are expected to rise here and overseas which puts further pressure on stocks.”