SA households lose R253bn wealth in third quarter mainly on rate hikes
THE VALUE of South African household wealth decreased by R253 billion in the third quarter, dented mainly by rate hikes, according to the Momentum/Unisa South African Household Wealth Index for the third quarter of 2022, which was released yesterday.
The decline in the value of household wealth was caused by a decrease in the value of household assets, specifically financial assets.
Johann van Tonder, an economist at Momentum, said yesterday: “Several factors contributed to the declining value of household assets over the past six months. The most prominent of these factors are fast and large increases in interest rates all over the world in an attempt to combat high CPI (consumer price inflation) rates, and an expectation of a world economic recession.”
He said households were essentially an estimated R977.5bn poorer compared to the third quarter last year and at similar levels as in quarter one 2015.
The value of South African household wealth decreased by around R1.528 trillion, or 9%, since the first quarter of this year to R15.5trln in the third quarter. The index showed a household wealth decline of R1.275trln in the second quarter. This as the value of household wealth was R9.3bn, or 0.1%, lower compared to the third quarter in 2021.
“If households want to climb out of this rut and gain more wealth, their income must increase at least by more than the CPI rate,” he said.
In September, the BankservAfrica Economic Transactions Index (Beti) declined further to an index level of 131.1 points, notably lower than the all-time high of 143.2 points in May and the lowest since the 130.6 points reached in December 2021.
This as South Africa’s local economy buckled under the pressure of severe load shedding and global headwinds.
The Beti declined for the fourth consecutive month with a contraction of 0.4% recorded in September compared to 2% in August.
Consequently, Momentum said the index revealed that share prices declined and bond yields increased, negatively affecting the value of households’ pension funds and investments.
According to the index, the value of household pension funds and other interests in long-term insurance declined by an estimated R630.3bn since quarter one 2022, while investments, such as unit trusts, decreased by R1.061trln. Combined these two asset categories declined by R1.691trln.
This decline was marginally offset by an increase of R250.1bn in the value of other assets such as residential buildings, durable goods, and deposits, leading to the value of total assets decreasing by an estimated R1.441trln.
In addition, the index showed outstanding household liabilities increased by an estimated R86.9bn in the six months to quarter three 2022, with equal increases in outstanding bond mortgages and other debt.