Monday 6th September 2010 |
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Household borrowing is falling faster than new investment in housing, suggesting New Zealanders are starting to get on top of rising debt levels for the first time in a decade, according to Treasury analysis released today.
“The slowdown in household borrowing has also seen new building fall to historically low levels – additions to the housing stock in 2009 were the lowest since at last 1991,” said the special commentary, entitled “Are Household Savings on the Mend?”
“The fall in borrowing has been even larger than the fall in new investment, resulting in an increase in housing equity.”
Data provided with the commentary suggests this is the first such boost to household equity since 2002, and a much stronger boost than at any time in the last 20 years.
Measurements of consumer confidence also suggest that lower spending habits are starting to kick in. While recent confidence measures have shown a strong bounceback, retail sales figures have lagged behind that improvement, compared to historic trends.
“For now, the long upward trend in household debt seems to be turning,” the Treasury says.
The October 1 tax changes, which are intended to reward savings over spending, “will help reinforce the current shift in behaviour”.
If household debt continues falling, “not only might households feel more financially secure, but it might make room for the export sector expand and place the overall economy on a more secure footing,” the Treasury said.
Businesswire.co.nz
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