According to statistics from the South African Savings Institute, household savings in relation to GDP is at just 1.7%, indicating that South African consumers have a poor saving culture. On average, the household debt ratio in relation to disposable income is around 75.8% and household disposable income is at just 2.4%.
“South Africa is considered to have a relatively low savings rate when compared to other emerging markets around the globe,” says Adrian Goslett, CEO of RE/MAX of Southern Africa. “The implications of a low savings rate at household level is that if there are not enough savings to fund the requirements of a household – be it for consumption or investment purposes – that household will be forced to borrow money. The effect of this is that the more consumers borrow, the less creditworthy they will become, which in turn pushes up the interest rates they will be charged.”
He notes that consumers who wish to purchase property in the future but don’t currently have a savings plan in place will need to start adjusting their financial strategy and put money aside. “The market phase we have seen over the past few years has produced some excellent opportunities for buyers to get their foot into the door, however it is concerning to think that so many have been unable to take advantage of the conditions because they do not have their finances in order. Obtaining the necessary finance to purchase a home is closely linked to affordability, but many