South African households are poorer than they were two years ago and if the economic conditions remain difficult‚ the middle class might be forced to seek assistance from government.
A study done by Momentum and the University of South Africa (Unisa) showed that the real net wealth of local households in 2015 has decreased by R6 302 to R386 115 since 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‚” read the study released on Wednesday.
“Momentum/Unisa estimates that real household net wealth decreased to R6.287-trillion in the fourth quarter of 2015 – this is R45.1-billion lower than a year before in quarter four of 2014.
“This decrease means that real household net wealth contracted in three of the four quarters of 2015 – and ended the year at a level just above that registered in quarter one of 2014.”
According to the study‚ the decline meant that households needed to continue cutting their expenses.
Households would also be forced to review their future lifestyle expectations by adjusting their saving and retirement targets‚ it was recommended.
“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‚” the study read.
“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 study noted that 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.
“[T]he ratio of financial assets to disposable income declined from 304.44% at the end of 2014 to 298.16% at the end of 2015.”
According to Momentum and Unisa‚ the increase in household debt during the fourth quarter of 2015 was more likely to have been due to people buying durable (cars‚ furniture‚ electronic goods and so forth) and semi-durable goods (clothing‚ household furnishings‚ vehicle accessories and so forth) on credit rather than buying fixed assets such as property.
SA households getting poorer – and it may become government’s problem
South African households are poorer than they were two years ago and if the economic conditions remain difficult‚ the middle class might be forced to seek assistance from government.
A study done by Momentum and the University of South Africa (Unisa) showed that the real net wealth of local households in 2015 has decreased by R6 302 to R386 115 since 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‚” read the study released on Wednesday.
“Momentum/Unisa estimates that real household net wealth decreased to R6.287-trillion in the fourth quarter of 2015 – this is R45.1-billion lower than a year before in quarter four of 2014.
“This decrease means that real household net wealth contracted in three of the four quarters of 2015 – and ended the year at a level just above that registered in quarter one of 2014.”
According to the study‚ the decline meant that households needed to continue cutting their expenses.
Households would also be forced to review their future lifestyle expectations by adjusting their saving and retirement targets‚ it was recommended.
“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‚” the study read.
“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 study noted that 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.
“[T]he ratio of financial assets to disposable income declined from 304.44% at the end of 2014 to 298.16% at the end of 2015.”
According to Momentum and Unisa‚ the increase in household debt during the fourth quarter of 2015 was more likely to have been due to people buying durable (cars‚ furniture‚ electronic goods and so forth) and semi-durable goods (clothing‚ household furnishings‚ vehicle accessories and so forth) on credit rather than buying fixed assets such as property.
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