New Zealand Households' Attitudes toward Various Forms of Savings and Investment

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New Zealand Household Attitudes towards Savings, Investment and Wealth: A Report on Phase One Janice Burns and Maire Dwyer September 2007 SUMMARY This study examines New Zealand household’s attitudes to various forms of saving and investment. A specific objective is to better understand the reasons for preferring investment in property over other investment, particularly financial investments. This paper reports on phase one of the project. The project uses three sources of information – published studies and a review of policy settings, interviews with individuals knowledgeable about investment and savings behaviour and attitudes, and interviews with eight consumers aged between 30-50 years. Investment and savings attitudes and behaviour…show more content…
This report draws together the results of phase one. Interviews were carried out in July and the first half of August, 2007. 2 3 CONTEXT High levels of household spending have fuelled inflation pressures over recent years and New Zealanders have spent more than they earned, despite relatively high interest rates (Reserve Bank 2007). Over the thirty years to 2002, net national saving (by households, businesses and government) has trended downwards as a percentage of New Zealand Gross Domestic Product (Claus and Scobie, 2002:32). 1 However, a decline in household saving has been partially offset by an increase in government saving. Statistics New Zealand’s household income and outlay account shows a steady decline in the nominal level of household savings since 1993 (NZIER, 2006:23). A downward trend in saving is evident across many OECD economies, though New Zealand’s household saving rate has been among the lowest, or the lowest, for much of the last twenty years. Notwithstanding the downward trend in saving, gross household wealth has risen. This has been due to the rise in real estate values. The rise in house prices has been accompanied by a large rise in household debt, relative to household income. While net household wealth in New Zealand has grown over the last two decades,. New Zealand households have lower levels of wealth than households in Australia, Canada, the UK and the US. While New Zealanders invest a similar share of their disposable income in

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