New Zealanders' Net Wealth Posts Biggest Decline in 10 Years

By Tracy Withers

July 11 (Bloomberg) -- The average net wealth of New Zealand consumers posted the biggest fall in almost 10 years as house prices and stocks declined while rising interest rates increased debt.

Net wealth, which includes the value of homes, investments and bank deposits less debt, dropped 1.6 percent in the first quarter, according to a report released today by Auckland-based financial adviser Spicers. The value of stocks and pension funds fell 1.8 percent while debt increased 2.2 percent.

Falling net wealth adds to signs household spending may slow, curbing economic growth. Consumer confidence fell to a 17- year low in the first quarter and the economy contracted 0.3 percent, putting the economy on the brink of a recession.

As well as the decline in the value of investments, house prices are falling, Spicers said in the report e-mailed to Bloomberg News. Housing makes up about 80 percent of total assets owned by households.

``We expect the value of housing assets to remain under pressure for the foreseeable future,'' Spicers said. ``Houses are taking longer to sell, prices continue to come under pressure and household budgets are straining.''

Household debt is rising at a slower pace as consumers take a more cautious approach to borrowing, Spicers said. Households no longer have the safety net of rapidly rising house prices to give them comfort when they borrow, it said.

Average net wealth has increased 95 percent the past 10 years.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.