South African households’ actual web wealth elevated by an estimated R1 trillion from the onset of the second quarter of 2020 (Q2 2020) to the top of the yr (This fall 2020).
This was a key discovering within the newest Momentum-Unisa Family Wealth report, which exhibits that family wealth recovered regardless of Covid-19, the lockdown, job losses, and an financial contraction.
This restoration follows an estimated decline of R772.8 billion in the course of the first quarter of 2020 that resulted from the introduction of lockdowns in lots of international locations – together with South Africa – to restrict the unfold of Covid-19.
Momentum-Unisa stated that the actual worth (expressed in 2010-prices) of family web wealth elevated to R7.7 trillion by the top of the fourth quarter 2020. That is R236.3 billion larger than a yr earlier than.
The rise in family web wealth was much more spectacular when measured in nominal phrases (present costs). It’s estimated that family web wealth elevated by R1.95 trillion from the top of Q1 2020 to the top of This fall 2020.
Unisa stated that the big enhance in family web wealth can primarily be ascribed to sturdy development within the worth of monetary property corresponding to shares and bonds.
It added that households’ pension funds and monetary investments benefitted immensely from the will increase in these monetary devices.
“The actual worth of households’ web wealth fluctuated in the course of the yr. It declined sharply in the course of the second half of March 2020 when Covid-19 began spreading internationally and governments responded with lockdowns.
“This prompted the worth of all kinds of property to say no. The lower was, nonetheless, extra pronounced within the worth of monetary property.”
Momentum stated that the restoration in asset values began in April 2020, stagnated in Q3 2020, and accelerated once more in This fall 2020.
“On the identical time the excellent values of family debt declined in Q2 2020 as households’ compensation of money owed exceeded the uptake of recent credit score. Nonetheless, there was a gradual enhance within the extension of recent credit score to households from Q3 2020 onward.”
The researchers stated early indications are that the actual worth of family wealth ought to enhance additional in Q1 2021.
Continued liquidity injected into monetary markets and a stronger underlying economic system ought to help monetary property. On the identical time unsecured money owed appear to extend at a gradual tempo.
What makes somebody rich?
As is the case in most international locations, family wealth in South Africa is extra unequally distributed than family earnings. Within the case of South Africa, the distribution of family web wealth is very unequal.
The Momentum-Unisa Family Finance database revealed that the top 2% of households owned nearly 50% of South African family web wealth simply earlier than Covid-19 and lockdown. The highest 10% owned 75.5% of family web wealth.
By comparability, the underside 16% had a damaging web wealth place, that means what they owe in money owed exceeds what they personal in property.
Though the subsequent 41% of households had a zero to constructive web wealth place, the mixed place of the underside 57% (backside 16% and subsequent 41%) present that they cumulatively owned 0% of family web wealth.
Nonetheless, evaluation of the wealthiest households revealed that lots of them don’t type a part of the highest income-earning teams.
They had been common earnings earners, whereas a number of of the households within the larger earnings teams have damaging web wealth positions – that means that their money owed exceeded their property.
“This, once more, confirmed that incomes a excessive earnings shouldn’t be a assure for a excessive web wealth place. It’s what you do along with your earnings that performs a defining position in wealth creation,” the researchers stated.
Additional evaluation from the Momentum-Unisa Family Finance Database recognized just a few frequent traits among the many wealthiest 10% of households.
They gathered financial savings in retirement funds and different monetary devices corresponding to shares and unit trusts, whereas their money owed had been inexpensive.
The wealthiest 1% to 2% households additionally owned high-value properties along with massive monetary property.
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