South African Household Wealth Grows in 2018

Net wealth increasing, inequality still exists

South African household’s real net wealth increased to R7.3 trillion in 2018, yet inequality was still a problem with 20% of this wealth owned by top earners.

This information was reported in the Momentum/Unisa Household Net Wealth Index for 2018. The numbers represent the first growth in wealth since 2014 and showed South African households were growing assets and managing their liabilities.

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Overall, growth in household assets was R8.2trn to R8.7trn for the year, up 5.9%, and the biggest increase since 2012. Alongside this, Momentum/Unisa estimated that the real value of South African household debt increased by R32.7bn to R1.4trn between 2016 and 2017. The increase in wealth however, could largely be attributed to the performance of financial assets, with shares and bonds increasing in value.

Momentum notes that “Household assets mostly consist of the value of retirement funds, other financial investments and residential buildings; while liabilities typically comprise outstanding credit and other accounts”.

Momentum’s research also showed that wealth favours those with higher education. “Households with a tertiary education possess 51.6% of total income, 57.8% of net wealth and 59.2% of assets, while they are also responsible for 66.2% of all outstanding liabilities.”

Despite the stronger outlook for households’ finances, inequality was still a problem with assets concentrated in relatively few hands with the bottom 20% owning only 2.7% of total assets. In line with this, 80% of household liabilities were owned by the top 20%.

Rand movements and consumer trends

One area of growth for the South African economy will have been the increased domestic spending due to uncertainty over a weakening Rand abroad, however there has been a rebound against foreign currencies, which has helped the incomes of SA’s wealthy.

South African Consumer Spending rised strongly into January 2018 and this has been alongside the growth in assets seen in the household wealth index which is another indicator of rising incomes and is a positive sign amidst rising prices in fuel and electricity.

A recent survey by Euromonitor highlighted that 2012-2016, saw values of internet retail sales increase by 54%, reaching R520 in 2016. This figure included sales of mobile retailing, which saw strong growth of 104% over the same period. It is expected that South African’s will continue to expand their interest in online retailing and the move to a cashless society alongside other nations.

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