South African Household Wealth Index Q4 2012 (PDF)
The value of South African household wealth for the first time surpassed R6 000 million in the fourth quarter of 2012, according to the latest Momentum/UNISA South African Household Wealth Index. The results of the latest research by the Personal Finance Research Unit (PFRU) of the Bureau of Market were released on Friday, 19 April.
The index is the result of an agreement between Unisa and Momentum whereby the company is sponsoring research by the Personal Finance Research Unit (PFRU) of the Bureau of Market Research into South African household wealth. It is the first independent, credible and comprehensive research of its kind in South Africa and the findings present an invaluable and unprecedented benchmark in understanding the state of the nation’s financial wellness.
According to the latest findings South Africans continue to get wealthier, clocking up two consecutive quarters of growth. At the same time the data show that households are worse off due to relatively recent recessionary factors. The recession of 2008/2009 reduced the real value of household wealth significantly and the knock-on effects of this are due to be keenly felt. Expressed in years, the recession wiped out five years of household wealth. This will have consequences for the retirement age of individuals and the contributions they are making towards their retirement funds. To realise pre-recession expectations, individuals are going to have to save and invest more and work longer.
At a glance, South Africans continue to get wealthier, clocking up two consecutive quarters of growth. South African households experienced a surprisingly strong 2012 fourth quarter increase in the value of their nominal net wealth. The report revealed that nominal household wealth increased at a seasonally adjusted and annualised rate of 28.8%. This growth occurred despite violent labour strikes at South African mines, mediocre domestic economic growth and a slowing international economy.
While these figures look heartening at first sight, real net wealth per household has decreased by, on average, 0.04% per year since 1975, suggesting that household balance sheets are not well at all. The growth in unsecured personal debt is still a persistent problem and bears some of the responsibility for weakening personal wealth and savings rates. This is real cause for concern; and policymakers, the private sector, and households should all pitch in and take responsibility in turning this situation around.
Commenting on the long-term outtake of the data, Prof Bernadene de Clercq, head of the Personal Finance Research Unit at UNISA’s Bureau of Market Research said, “Despite nominal increases in net wealth, real household wealth per household is not at all sufficient for purposes of independent retirement or maintaining current living standards. Too many households – especially those who are in a position to accumulate assets thanks to strong increases in their real disposable income over the past decade – apportion insufficient shares of their income towards asset accumulating investments as they rather purchase consumption goods.”
At a glance the South African households experienced a surprisingly strong 2012 fourth quarter increase in the value of their nominal net wealth. The report revealed that nominal household wealth increased at a seasonally adjusted and annualised rate of 28.8%.
The main driving force behind the increase in nominal household wealth was a strong increase in the value of South African household assets. The main source of the increase in the value of household assets was the strong performance of share prices. On an annualised basis, the JSE All Share Index increased by 45.2% during Q4.
At the same time the data also show that households are worse off due to relatively recent recessionary factors. The latest findings by the PFRU have shown that the recession of 2008/2009 reduced the real value of household wealth significantly and the knock-on effects of this are due to be keenly felt. Expressed in years, the recession wiped out five years of household wealth. This will have consequences for the retirement age of individuals and the contributions they are making towards their retirement funds. To realise pre-recession expectations, individuals are going to have to save and invest more and work longer.
