South Africans became R237bn poorer in 2019

South Africans are a lot poorer than they were five years ago, due to high debt and low income, with the result that many are struggling to acquire assets such as cars and property.

According to the Momentum/ Unisa Household Net Wealth Index, SA households’ real net wealth declined by R237 billion in the third quarter (Q3) of 2019, compared with the Q2 and was R133.7 billion less than in Q3 of 2018.

The real value of household assets decreased by R240.9 billion between Q2 and Q3, to R8 381.9 billion – despite households increasing their savings to pension funds and retirement annuities.

Consumer assets consist of the combined values of their savings in pension and retirement instruments, financial investments and residential properties.

The report states the decline in the real value of household net wealth was almost solely caused by a decrease in the real value of households’ assets. This is despite consumers saving more money in pension funds, which should have contributed to an increase in the real value of their assets.

When expressed as a percentage, the ratio of household net wealth declined from 276% in Q2 to 266.7% in Q3 2019.

As the real value of households’ outstanding liabilities increased less than their gross income, the ratio of their liabilities to gross income declined slightly from 54.4% in Q2 to 54.2% in Q3 2019.

Johann van Tonder, researcher and economist in Momentum’s consumer insights division, says this is because a lot of households are using their salaries mostly to pay off debt, leaving little money to acquire wealth or even save.

“What this means is that the bulk of households in SA will not have enough saved by the time they have to retire. So this puts an additional … burden on the government because there will be more people in need of grants.”

Van Tonder says this means SA is faced with a double problem, with “the value of assets not growing and the economy also not increasing”.