Is the number of South Africans living in their own homes declining?

The general household survey conducted by Statistics South Africa which was released this month shows that the number of South Africans living in their own homes which they have fully paid for has declined from a peak of 61.4 percent in 2008 to 54.9 percent last year.

The figures do not show whether people are losing their homes or whether there has been an increase in the number of households with most not owning their homes.

The survey says in 2002, only 52.9 percent of South African lived in their own fully-paid homes. This figure increased peaking at 61.4 percent in 2008 but declined to 53.5 percent in 2011 before increasing again to 54.5 percent in 2012 and 54.9 percent last year.

The survey showed that there were 15.1 million households in South Africa last year and 8.3 million owned homes that were fully paid for. Some 3.2 million were renting, while 1.9 million were living in rent free homes. Another 1.4 million owned their homes but were still paying for them.

While the majority of South African households are living in homes that have been fully paid for, figures from the National Credit Regulator show that there are 20.64 million credit-active consumers and just over half are in good standing.

The latest figures are for December last year and they show that only 10.71 million consumers were in good standing. A staggering 9.93 million had impaired records with 2.6 million having judgments and administration orders pending.

SA consumers to be hard pressed

South African consumers are likely to continue experiencing financial strain in the wake of a poorly performing economy, low employment and real income growth, one of the country’s leading banks ABSA says in its latest Housing Price Indices report.

The economy contracted by 0.6 percent in the first quarter. Barclays, the parent company of ABSA,  says growth for this year will only be 1.4 percent. The Reserve Bank says it will be 2 percent.

For those who can raise the cash, this is the ideal time to buy property because the housing market has been stable with average price growth of between 8 and 9 percent during the past nine months.

But upward pressure on inflation and an expected further hike in interest rates will affect consumers’ spending power and impact credit accessibility, affordability and demand.

Average prices for homes in May were:

• Small homes (80m²-140m²): R837 200
• Medium-sized homes (141m²-220 m²): R1 146 800
• Large homes (221m²-400m²): R1 780 200

 Consumer price inflation averaged 6% year-on-year in the first four months of the year, and is forecast to remain above this level for the rest of the year.

Interest rates are expected to be hiked by another 50 basis points in September, which will bring prime lending and variable mortgage interest rates to a level of 9.5% per annum by year-end.

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Seven steps to get out of debt

Debt is addictive. And when you are in debt, you might not realise how deep you are unless you are totally overwhelmed and everyone is after your neck. Otherwise, you will keep on thinking, I will resolve this next month, and next month becomes next month.

Debt counsellor Anton van de Venter says it is easy to get out of debt.  He has prescribed seven  easy steps.

Step 1

Act Now – talk to someone you can trust, be honest and tell them everything, this should probably be a debt counsellor but a knowledgeable friend or business colleague may also do.

Step 2

“It’s not how much money you make (or spend); it’s how much you can keep.” says Robert Kiyosaki of, “Rich Dad, Poor Dad” fame. Often poor people do not carry happiness within themselves and depend on external sources for their happiness, buying to impress makes them feel good. Rule No. 1 – If you don’t need it to survive DO NOT BUY IT. (to survive is very different to, “nice to have”)

Step 3

Credit cards are the enemy – cut them up, lock them in a safe or give them to a trustworthy person – CARRY a DEBIT CARD. Now you can only spend money you have. If you run out – GO HUNGRY, most people eat too much anyway.

Step 4

Budget, budget, budget – talk to your family, get everyone on the same page, make SERIOUS cuts to your budget and stick to them. Turn off DSTV, no more maid, cut your own grass, stop eating meat, stop smoking – get your children involved, you will be surprised how understanding and willing they are to help. Remember you are a family, they love you for you not for the TV!

Step 5

Call your creditors and discuss your situation with them, make arrangements, do not let debit orders fail, this just costs money. Nearly ALL creditors will assist you, BUT you need to be persistent and give them honest and accurate information. Do not accept no for an answer, if they really can’t help you then speak to a Debt Counsellor, remember the National Credit Act can protect you in spite of what the credit provider will tell you.

Step 6

Be patient, getting rid of all the debt that you’ve accumulated over the last 10 or 15 years can be a very slow process so don’t be discouraged, it’s a process.

Step 7

Do not carry extra cash in your wallet, do not visit shopping malls – spend spare time outdoors with your children. Shopping centres are much better at convincing you to spend money than you think – they are experts at getting you to part with your money.

Can you swallow this? You have to if you want to get out of debt and start saving.

This except was reproduced with permission of the author for our book: How to buy a house for half the price.

Why people get into debt

Nearly 30 000 debt judgments involving a total of R388.6 million were passed in South Africa in April according to Statistics South Africa.  Some 72 003 summons for debt were also issued in the same month.

South Africans are increasingly pressure as the debt crunch catches up with them. According to the National Credit Regulator, 189 000 joined the ranks of bad debtors in the first quarter of this year.

There were 20.08 million credit-active consumers at the end of March. Those with bad debts increased stood at 9.53 million.

Despite this appalling picture there were 15.26 million enquiries from consumers seeking credit during the period.

The question, most people would want to know is: Why do people get into debt?

Author Danie Vorster says one of the major reasons why people get into debt is that they live their neighbours’ lives. They compete with people without knowing what the other person earns or how the other person sustains him or herself.

People land in debt because they are obsessed with success. We all want to be successful or at least to be seen to be successful.

“It is often not the person from a wealthy background who is obsessed with success, but rather the one from a modest or poor background,” Vorster says in his book: Debt-trap or Debt-free.

Vorster says other reasons why people get into debt are:

• Greed, bad habits and weak self-discipline.
• Some people live lifestyles that they cannot afford because they want to be seen as wealthy.
• Living to other people’s expectations. Some people get into debt to live the kind of lives that people expect them to live and where they expect them to live.
• Hunger for power and recognition.  These people want to use money to gain power and to be recognised as the rich and end up in debt.
• Weak self esteem.  Some people think so lowly of themselves that they surround themselves with all sorts of tangible possessions to give the impression that everything is OK.
• Unhappy or deprived childhood. Some people who grew up poor surround themselves with all sorts of things - houses, cars- bought on credit to give the impression that they have made it in life.

The major problem with debt, Vorster says, is that it turns you into a slave. You are always one step behind, “.using today’s limited resources to pay off yesterday’s long forgotten privileges”.

Our book: How to buy a house for half the price has a full chapter on getting out of debt.