Wealth con­tin­ues to de­cline in S Africa

But less than sec­ond quar­ter

The Star Early Edition - - NEWS - Sandile Mchunu

THE MO­MEN­TUM/Unisa South African House­hold Wealth in­dex has con­tin­ued to show a neg­a­tive trend as it de­clined by 0.9 per­cent in the third quar­ter of 2016. Al­though the in­dex has re­ported a de­cline in the wealth in­dex, it is much bet­ter than the 2.7 per­cent de­cline re­ported in the sec­ond quar­ter of 2016.

Mo­men­tum, in col­lab­o­ra­tion with Unisa, mea­sures the state of South African house­holds’ wealth on a quar­terly ba­sis.

The Mo­men­tum/Unisa in­dex said the fall is a con­tin­u­a­tion of a long-term and volatile trend that started in 2014.

Real value

The in­dex showed that the main rea­son for the de­cline in the house­hold net wealth to dis­pos­able in­come ra­tio can be as­cribed to a de­cline in the real value of house­hold as­sets.

“The real value of house­hold as­sets de­clined at an an­nu­alised pace of 0.8 per­cent be­tween the sec­ond quar­ter and third quar­ter of 2016, fol­low­ing a de­cline of 2.4 per­cent in the pre­vi­ous quar­ter,” the re­port said.

It was at R8.41 tril­lion at the end of the third quar­ter of 2016, down R15.7 bil­lion from the sec­ond quar­ter of 2016.

The lower value of real house­hold as­sets can be as­cribed to pro­por­tion­ally lower con­tri­bu­tions to re­tire­ment funds and an­nu­ities that are in­vested in, among oth­ers, com­pa­nies listed on the JSE as well as a lack of growth on such in­vest­ments.

Mo­men­tum/Unisa anal­y­sis shows that house­holds’ con­tri­bu­tions to re­tire­ment funds and an­nu­ities de­clined to 12.1 per­cent of their es­ti­mated af­ter-tax in­come in the third quar­ter of 2016, down from 12.2 per­cent in the sec­ond quar­ter of 2016 and 12.9 per­cent a year be­fore.

“In ad­di­tion, the JSE all share in­dex, which serves as an indi­ca­tor of the growth achieved on such in­vest­ments, was 2.5 per­cent lower at the end of the third quar­ter of 2016 com­pared to the sec­ond quar­ter of 2016, while it was only 1.3 per­cent higher than a year be­fore,” the re­port said.

How­ever, there were en­cour­ag­ing signs in the li­a­bil­i­ties/debt in­dex as the house­holds man­aged to mon­i­tor their debts.

In the last quar­ter, house­holds on av­er­age succeeded with the goal of keep­ing their li­a­bil­i­ties in check, but their as­sets failed to grow, a trend that has been con­tin­u­ing for more than two years.

“The Mo­men­tum/Unisa House­hold Li­a­bil­i­ties In­dex ac­cel­er­ated by only 0.2 per­cent in the third quar­ter of 2016. In ad­di­tion it was 0.9 per­cent lower com­pared to a year ago, (third quar­ter of 2015),” the re­port showed.

The above anal­y­sis shows that al­though house­holds are re­duc­ing their debt in re­la­tion to their dis­pos­able in­come, they re­main vul­ner­a­ble to un­ex­pected shocks.

A num­ber of house­hold don’t have suf­fi­cient emer­gency funds avail­able, while at the same time they are not sav­ing suf­fi­ciently for re­tire­ment.

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