SA citizens become poorer as value of assets drops

Despite boosting their retirement savings, South Africans became poorer in the third quarter of last year as the real value of their investments and residential properties dropped.

According to the latest SA Household Net Wealth Index by Momentum and Unisa, the real net wealth of households declined by an estimated R237bn between the second and third quarters of last year.

The real value of household assets decreased by R240.9bn between the second and third quarters of last year to R381.9bn, despite households increasing their savings in pension funds and retirement annuities, the report states.

Over the full-year period to the end of the third quarter of last year, the decline was R133.7bn.

The JSE all share index lost 6.8% and the all bond index dropped 0.3%, but the value of household deposits increased by 1.7% over the quarter. These figures are all after inflation.

The bulk of households’ pension funds, retirement annuities and other investments are invested in shares and bonds and the share and bond price decreases contributed hugely to the decline in the real (after-inflation) value of their financial assets.

This is despite the contributions to pension and group life schemes, retirement annuities and pension funds increasing by 5.7% over the quarter compared with the previous one, the report states.

International events such as the trade war between the US and China, fears of a US economic recession and international terrorist attacks “had a profound, negative impact” on the real value of your pension fund and investments, the report states.

Domestic events such as Eskom spiralling downwards, state capture and a weak economy also contributed to the loss of wealth overall. 

The after-inflation value of residential assets also declined because real house prices remained unchanged between the second and third quarters last year, while new investments in residential property declined at an annual 4.6%.

Coupled with depreciation, this contributed to a decline in the real value of the household property values overall.

Domestic factors were the main cause of the decrease in the real value of household property values, including Eskom’s inability to generate enough electricity, which resulted in the economy shrinking by 3.1% over the quarter. — BusinessLIVE