While many South Africans are feeling the pinch from higher inflation and a stagnant economy, the latest Momentum/Unisa Household Wealth Index shows that the real net worth of South African households has grown from the end of 2015.
The index shows that the real worth of households grew by 3.9% between the fourth quarter of 2015 and first quarter of 2016 – an increase of R67.8 billion.
However, total household wealth for the first quarter was still lower than it was last year, estimated at just over R7.08 trillion, compared with R7.16 trillion in Q1 2015.
According to Momentum, the reason for the increase in household wealth is due to fewer liabilities – people are paying their debts a lot faster. The index showed that 25.6% of gross income is now going to paying off debt – up from 23.1% in 2015.
This has been chalked up to season factors – such as bonuses getting paid out – as well as the Reserve Bank hiking rates.
The group said that a decline in household wealth typically points to an outcome where South Africans will have to downgrade their lifestyles in order to stay afloat. Poorer households will ultimately be forced to turn to the government for assistance.
At this stage, the rise in household wealth cannot be called a trend, Momentum said, as we would have to wait until the end of the year to draw any conclusions.
Other notable findings from the report were that households are still not saving enough – especially for retirement – though it would appear that South Africans are tightening their belts and being more responsible with their finances.