Property Barometer: Household sector finances

FNB reports that the household sector battles to improve its debt and saving situation, amidst the stagnating income growth. 

With the stagnating economic growth, translating into a slowing employment and income growth, the South African household sector has had a tougher time to make further improvements in terms of reducing its debt-to-disposable income ratio and also raising its saving rate.

FNB has said that although the current 78.3% rate of household debt-to-disposable income is still lower than 2008’s 88.8%, it is still unacceptably high, and that they had hoped for further decline in order to reduce the household sector’s vulnerability to economic and interest rate shocks. 

Summing it up, the SARB Quarterly Bulletin continued to point to mounting constraints on Consumer Finances in the 3rd quarter. Disappointingly, this stalled the downward trend in
the all-important Debt-to-Disposable Income Ratio. It has also arguably postponed the start of an improving savings ratio.

Ultimately, though, we expect that these pressures will lead to a more conservatively spending Household Sector, and improvement in both of these ratios.

You can read the full report by John Loos, household and property sector strategist at FNB here: CLICK FOR REPORT

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