Momentum Unisa wealth report

The highly anticipated Momentum Unisa Wealth Report has been released.

Executive summary and highlights

• South African households’ real net wealth decreased in 2015.

• Momentum/Unisa estimates that real household net wealth decreased to R6 287.4 billion or
R6.287 trillion in the fourth quarter (Q4) of 2015 -this is R45.1 billion lower than a year before (Q4 2014).

• This decrease means that real household net wealth contracted in three of the four quarters of 2015 (following contractions in Q2 and Q3) – and ended the year at a level just above that registered in Q1 2014.

• These declines contributed to real net wealth per household decreasing to levels below that of 2013. Real net wealth per household is estimated at R379 813 in 2015 – which isR6 302 lower than the R386 115 registered in 2013.

• This was mainly due to a decline in real assets per household (that decreased to an estimated R466 948 in 2015 from R480 558 at the end of 2014) and an increase in the number of households.

• The consequence of this decline in real net wealth per household is that households will have to continue with the process of lowering their lifestyle expectations– which started in 2013. Moreover, they will be forced to review their future lifestyle expectations by adjusting their saving and retirement targets.

• If this situation of declining real net wealth per household is not reversed, a growing portion of the middle aged and middle class will turn towards the government for assistance. However, the government is already overstretched given a lack of fiscal resources and not being able to even fully assist the low income groups.

• The deterioration in the real value of household net wealth can be ascribed to the real value of
household assets declining further in 2015, while their real liabilities increased.

• The main reason for the decrease in the real value of household assets can be ascribed to a
reduction in the real value of financial assets in 2015. Consequently the ratio of financial assets
to disposable income declined from 304.44% at the end of 2014 to 298.16% at the end of 2015.
The ratio for property assets remained constant at around 103%.

• However, the real value of South African households’ liabilities increased to R1 442.4 billion in Q4 2015 from R1 413.4 billion in Q4 2014. The main reason for this increase can be attributed to a strong acceleration in the pace at which households took up debt during Q4 2015.

• The increase in household debt during Q4 2015 was more likely to have been driven by strong
growth in consumption expenditure on durable (cars, furniture, electronic goods, etc.) and semidurable goods (clothing, household furnishings, vehicle accessories, etc.) than on fixed assets such as property and residential buildings

Click here to read the full report.