South African households saw R449.8bn of the real value of their net wealth wiped out between the fourth quarter of 2017 and the fourth quarter of 2018, according to the latest Momentum Unisa Household Wealth Report.
Households' outstanding liabilities increased by 1.5% (R21.2bn), to R1 414.8bn in real terms over the period, mainly driven by higher unsecured debt.
It estimates that the real value of SA household wealth was at the same level as between the first and second quarter of 2014.
The index report describes the decline in household wealth as "concerning", because it contributes to slower economic growth and job creation, as well as an increasing number of households in the low-middle to high income groups having insufficient money to cope with emergencies and retire at an acceptable standard of living.
This, in turn, will make the economy even more fragile and sensitive to negative shocks, causing more households to become poorer, according to the report.
Investment: Focus on retaining your wealth in 2019
Various domestic events contributed to the loss in real net wealth of SA households in 2018. These included:
The reduction in share prices of companies in which households' retirement funds are invested;Weak economic growth of just 0.8%;Increasing consumer price inflation;Renewed load shedding in the fourth quarter of 2018;Investor fears created by proposed land expropriation without compensation;An impression that the SA Reserve Bank's independence is in danger;The negative impact of growing public debt.
Internationally, the largest contributors were slowing international economic growth caused by, among others, the trade war between the US and China; higher interest rates in the US and other parts of the world; geopolitical events and Brexit.
At the same time, a mild recovery is expected to have occurred in the first quarter of 2019.