A vendor counts rand notes at a craft market in Johannesburg, South Africa. South African households recouped an estimated R200.5 billion of their net wealth in the first quarter of 2019. File picture: Waldo Swiegers
JOHANNESBURG - South African households recouped an estimated R200.5 billion of their net wealth in the first quarter of 2019, compared to the last quarter of 2018, largely due to a recovery in the real value of their investments in retirement funds and other financial assets such as long-term insurance products and unit trusts.

The Momentum/Unisa Household Net Wealth Index said yesterday that the households' real net wealth increased by R200.5bn from a revised R6857.1bn at the end of 2018 to R7057.6bn in April.

The index said when expressed as a percentage of gross household income, household net wealth increased from 265.3 percent in the fourth quarter of 2018 to 272.5 percent in the quarter ended April 2019, which is still lower than the 277.4 percent registered at the same period in 2018.

“The main reason for the better performance of the share and bond market during the first quarter of 2019 is the turnaround in international central banks’ views on interest rates. Whereas it was initially predicted that interest rates would increase during the course of 2019, this changed into a view of 'holding' and even reducing interest rates. This dramatic change in monetary policy supported both the share and bond markets,” said Johann van Tonder, Researcher & Economist at Momentum.

Residential assets continued to perform poorly, however, with the FNB House Price Index estimating that house prices declined in real terms during the first quarter of this year, compared to a year ago, while the SA Reserve Bank statistics revealed that real residential investments declined at an annualised rate of 0.3percent in the first quarter of the current year.

“Residential assets are strained by financial stress on household finances, caused by relatively high interest rates, a high income tax burden and increasing fuel prices,” Van Tonder said.

He said the sluggish growth in the real value of household debt indicates the financial pressures consumers are experiencing.

Real gross income per worker in the formal sector excluding agriculture was 1.5 percent lower than a year ago, which contributed to real liabilities as a percentage of gross income decreasing to an estimated 54.7percent in the first quarter of 2019 from 54.9percent in the fourth quarter of 2018 and 55.1percent a year ago.

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