The latest figures released by the Momentum/Unisa Wealth Index on Wednesday showed households real net wealth declined R119.2 billion last year, from R7.123.4 trillion in 2015 to R7.004.4 trillion.
The index said the recorded real net wealth was also R102.5 billion lower than the value at the end of 2014. The report said the real value of household net wealth has been on a declining trend for two years.
Johann van Tonder, Momentum researcher and economist, said there were a number of reasons for the decline.
“The main reason for the decrease can be attributed to the decline in the real value of household assets, while the real value of their liabilities increased slightly,” he said.
The real net wealth per household is estimated to have declined R18 382 to R411 941 at the end of last year. This is 4.3 percent lower than the R430 323 at the end of 2015 and also R4 113 lower than the R416 054 registered at the end of 2012.
“The larger decline in real net wealth per household (4.3 percent) compared to the overall real net wealth (1.7 percent) can be attributed to the growth in the number of households, while real net wealth declined,” Van Tonder said.
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The report also lamented the huge number of borrowings individuals made. “This includes borrowing for purposes of consumption rather than for asset accumulation like purchasing property. Analysis shows households spend almost 21c of every R1 of their gross income to repay debt.
“About 70 percent of the 21c is used to repay consumption debt, with 30 percent going towards the repayment of mortgages and vehicle purchases,” said Van Tonder.
The report pointed out that households with a strong net wealth position tend to be financially healthy.
International research has shown they share common behavioural traits that contributed to them being, or on their way to becoming, financially well. “They plan and manage their finances well; save sufficiently for retirement; have savings to fund emergencies; incur affordable debt and have adequate insurance to protect against disruptive unexpected events,” added Van Tonder.